Transport - Enhanced Integrated Framework (EIF)

TABLE OF CONTENTSCHAPTER 3 TRANSPORT SECTOR 13.1 INTRODUCTION 13.1.1 Purpose and Objectives this Study 13.1.2 Methodology 13.1.3 Purpose and Objectives of this Review 13.2 MACROECONOMIC CONTEXT 23.2.1 Main Geographical Characteristics 23.2.2 Economic and Social Policy 23.2.3 Public Finance 73.3 MALAWI POVERTY REDUCTION STRATEGY 83.3.1 The Malawi Poverty Reduction Policies and Strategies 83.3.2 Major Intervention Areas 93.3.3 MPRS Recommendations for the Transport Sector 93.4 DESCRIPTION OF TRANSPORTATION MODES 103.4.1 Road Sector 103.4.2 Railway Sector 323.4.3 Lake Transport 413.4.4 Airports and Air Transport 483.5 DONOR SUPPORT, ON-GOING AND PROPOSED PROJECTS 603.6 SUMMARY OF PUBLIC EXPENDITURE IN THE TRANSPORT SECTOR 653.7 KEY ECONOMIC AND SOCIAL INDICATORS 66ANNEXES 72Air costs 72Other barriers to air flight 72REFERENCES 73

Table 3.34 Total Malawi Traffic Handled through the Port of Dar-Es-Salaam in Tons(1990 – 2000) 70Table 3.35 Movement of Imports and Exports, 1998-2000 (‘000 Tons) 70Table 3.36 Funding of Road Development 2002 to 2005 as per PRSP 71

CHAPTER 3TRANSPORT SECTOR3.1 INTRODUCTION3.1.1 Purpose and Objectives this StudyThe primary purpose of this study was to analyze the strengths and weaknesses of thetransport sector in Malawi. This information is to be used in the Integrated Frameworkfor Technical Assistance for Trade Development in Least Developed Countries with theprime objective of integrating Malawi into the World Trading System.3.1.2 MethodologyAs part of the Integrated Framework mission team, the consultant conducted interviewswith several public and private sector organizations and drew on work carried out inprevious studies undertaken by the consultant and his associates in other consultinginitiatives. This task was carried out in conjunction with other members of the teamwhen appropriate especially in the areas of revenue mobilization. This involvedinterviewing a large cross section of personnel in the transport sector and other relatedindustries. This work represents a first draft. The consultant wishes to acknowledge allthose who assisted in the presentation of the draft and to those whose work contributedto the contents of this report.3.1.3 Purpose and Objectives of this ReviewPoverty alleviation has become the prime focus of the Malawian Government and thedonors. A poverty reduction strategy paper (PRSP) was finalized in February 2002. ThisPRSP is seen as a dynamic process subject to annual change in accordance with thedevelopment of the poverty reduction processes and their relative merits and demerits.The government budgetary expenditure programs are being redesigned to feed into thePRSP. The MTEF (Medium Term Expenditure Framework) is designed to alignGovernment expenditure with the PRSP.The transport sector is important to this PRSP process and is key to mainstreamingMalawi’s trade regime into the global economy.This study aims to provide a review of the current position in all modes in the sectorand assist in developing ideas for how the IF can assist in mainstreaming trade into theMalawian PRSP and its broader international economic agenda.1

3.2 MACROECONOMIC CONTEXT3.2.1 Main Geographical CharacteristicsMalawi is a land locked country with an area of 118,484 square kilometers. It isbordered by Tanzania to the north and east, Mozambique to the east, south and west,and Zambia to the west. The country lies on a plateau, generally between 750-1500meters above sea level, and is cut through by numerous rivers. Geographically it isdominated by Lake Malawi which measures 570 km north to south and, with a surfacearea of 28,760 square kilometers, is the world’s twelfth and Africa’s third largest lake.The maximum habitable area is only 46,265 square kilometers.Being landlocked, Malawi relies on its neighbors to maintain land based transport linkswith the outside world. The nearest port is Nacala in Mozambique, locatedapproximately 610km away from the country’s eastern boundary. The vast majority ofMalawi’s exports and imports are transported by rail to and from Nacala or by road toand from Beira in Mozambique, Dar-es-Salaam in Tanzania or Durban in South Africa.Transport costs to and from Malawi are high and whilst the rail and road links servingMalawi are adequate, there is room for improvement to reduce these high costs.The country is land-locked. Infrastructure is poor, and the economy is dependent on itsneighbors, especially Tanzania and Mozambique, as well as South Africa, for transportlinks to the sea. Instability in neighboring countries, like the civil war in Mozambique(especially from 1983 to 1987) and political intimidation in Zimbabwe (especially during2000-01), therefore has direct economic consequences for Malawi. Access to telephonesis poor: 3.5 telephones per thousand people, and Internet access is still limited.3.2.2 Economic and Social PolicyBasic facts and figuresMalawi is the sixth poorest country in the world, the second poorest in Southern Africa(after Mozambique). Its Human Development Index ranking is very low: 161 out of 174countries.In the last population census of 1998, Malawi had a population of 9.934 million. Thepopulation is currently estimated at 10.8 million with a rural/urban split of 86percent/14 percent. The population is unevenly distributed, reflecting the topographyand history of the country as well as regional variations in economic development. Thenational density in 1998 was 105 persons per square kilometer. The population growthrate between the censuses of 1987 and 1998 averaged 2 percent per annum, but will be2

falling now because of the effects of HIV/AIDS. Average life expectancy, which was 47years in 1997, is also decreasing in the wake of the HIV/AIDS pandemic, which ispresently estimated to infect 14 percent of the population aged between 15 and 49 years.Life expectancy at birth has declined to 42 years. Only about half of the population hasaccess to clean drinking water and sanitation, and there are only 0.03 doctors for everythousand people.If subsistence farming is taken into account, over 85 percent of the population is directlydependent on agriculture. Commercial agriculture accounts for around 35 percent offormal GDP, 50 percent of paid employment, 90 percent of exports (mainly tobacco, teaand sugar), and a significant proportion of the raw materials for domesticmanufacturing. The manufacturing sector is small: about 15 percent of GDP. There areless than 50 large firms operating in the economy, most of which are either foreignowned/controlled or government owned/controlled. Most manufacturing output,predominantly agri-processing, textiles, clothing and footwear, is destined for thedomestic market (although there has been significant growth in exports of textiles andgarments, especially to South Africa under the bilateral free trade agreement). Thesector is dependent on imports of physical capital, raw materials and fuel.The country is burdened by an onerous foreign debt, amounting to nearly two and ahalf times total output over the period 1995-99. It is heavily dependent on foreign aid,which averaged about one quarter of GNP during the 1990s. At the end of 2000,Malawi qualified for some debt relief under the HIPC initiative.In summary, the economy is vulnerable to severe external shocks to agriculture - worldpriceshocks and supply shocks (droughts or floods) - because what happens in theeconomy as a whole is closely linked with what happens in agriculture. The economy isalso vulnerable to disruptions to its transport links with the rest of the world. It isheavily burdened with external debt, and it is struggling with a severe AIDS epidemic.The effect of most of these factors is evident when past performance is reviewed briefly.Brief Economic HistoryIn order to assess future prospects, it is necessary to have a perspective on past events.After independence in 1964, the economy grew rapidly, averaging real annual growthof 6 percent from 1964 to 1979. The main sources of growth were a sharp increase in theproduction of export crops by both smallholder and large-scale farmers, a rapidexpansion of manufacturing by both private and public-sector investors, and highpublic investment in infrastructure, of which most was financed by foreign borrowing.In common with many other developing countries dependent on exporting primarycommodities other than oil, Malawi experienced recession and then recovery in the1980s, averaging real annual growth of 1.4 percent over the decade (compared with a3

eal annual average of 6 percent for the period 1964-1979). In fact, as elsewhere, growthdecelerated from 1975 as a result of a series of shocks to the world economy, andperformance was particularly weak after commodity prices collapsed in the early 1980s.There were circumstances unique to Malawi which exacerbated the recession of the1980s: the war in Mozambique, which closed the shortest route to the sea, raisingtransport costs substantially; the imposition of tighter import restrictions, whichhampered development of the import-dependent manufacturing sector; and initialcontraction under a structural adjustment program undertaken in 1981 as a condition ofthe rescheduling of external debt repayments which had become too onerous to honor.During the 1990s, growth performance was very strong following liberalization understructural adjustment, although there were two severe droughts, which reduced outputin 1992 and in 1994. Real annual average growth during the 1990s was about 5.5percent. However, severe pressure on resources was caused by the inflow of refugeesfrom Mozambique and a mounting health crisis caused by HIV/AIDS.In summary, past growth has been driven by developments in commercial agriculture,which has fluctuated in response to international demand, domestic supply conditionsand links with markets. Access to foreign capital was necessary for infrastructural andindustrial development, but excessive borrowing pushed the economy towards anunsustainably high level of indebtedness. Economic policy is important, especially as itaffects the rate of investment and external trade.Economic Policy and Current TrendsSince 1995 Malawi has attempted to implement a cash budget, after running fiscaldeficits which were, on average, more than twelve percent of GDP for at least twodecades. The improvement seen in 1996 (where the deficit fell to 5.5 percent) followsdeficit ratios of more than 25 percent in 1994 and 15 percent in 1995. It was notsurprising that the rate of inflation was high, as the deficit had been accommodated bya rapid growth in the money supply. The large current-account deficit was onlysustainable, because nearly 80 percent of imports were financed by aid during the1990s. Even so, the (controlled) currency had been depreciating against the US dollar atan average annual rate of nearly 20 percent. The external debt-to-GDP ratio hascontinued to grow, and foreign exchange reserves have been consistently low. Part ofthe problem was that the economy has been subject to a range of shocks, including notonly drought and floods but also the periodic withdrawal of aid flows in order to applypressure for political liberalization. This was patently unsustainable.A tightening of fiscal policy was necessary. Since 1997, there has been considerableprogress in reducing the budget deficit-to-GDP ratio, which averaged 2.3 percent in1997-99. Unfortunately, this has had no corresponding impact on bringing down therate of inflation, as tighter fiscal policy coincided with allowing a free float of the4

exchange rate. The 168 percent depreciation of 1997-99 fueled inflationary pressures.Domestic money growth accelerated, and a shift to positive real lending rates wasunable to dampen down the excess demand for money. In spite of evidence ofcontinuing macroeconomic disequilibrium, the economy has been growing faster thanthe rate of growth of the population, allowing an increase in per capita income. It ispossible that the growth rate of an average of 3.5 percent a year in the early 1990s andtwice that in 1995-99 (masking large swings year-on-year) was largely aid-financedgovernment spending, which can only be maintained for as long as donors are willingto tolerate slippage in attaining macroeconomic or ‘good governance’ targets.TABLE 3.1 KEY INDICATORS – MALAWI1980-89 1990-94 1995-99 2000 cReal GDP growth (%) 1.4 3.5 7.1 a 2.5GNP per capita (current US$) 171 203 238 n.a.Budget deficit (% GDP) -12.3 -11.1 -5.7 -2.4Inflation (%) 16.8 23.2 27.4 29.6Money supply growth (%) 18.3 31.1 39.5 34.0Real lending rates 2.5 0.0 3.1 30.0Depreciation against US$ (nominal) -11.2 -18.6 -168.2 b -34.7Exports plus imports (% GDP) 54.6 62.0 64.0 75.0Current account (% GDP) -9.0 -14.7 n.a. -12.9Aid (% imports) 55.9 79.2 38.3 n.a.External debt (% GNP) 89.8 113.2 235.0 n.a.Reserves (months of imports) 1.6 1.5 3.0 5.0Notes: (a) The 1996-99 average was 5.1 percent; in 1995 real growth was 15.5 percent because of the recovery after thedrought of 1994(b) 1997-99; (c) estimatesSource: World Bank, International Monetary FundOther reforms in the last five years include the rejuvenation of the privatizationprogram, and deeper liberalization of agriculture, of trade and of the financial sector,following which two new private banks and a stock exchange have been established.Lending rates are now positive, and Malawi has accepted IMF Article VIII, whichmeans that all current-account transactions are free of exchange controls, although somecapital controls remain. (Note that businesspeople still complain of delays in accessingforeign exchange for current transactions.)The effects of the reforms on business has been mixed. The manufacturing sector hasactually contracted, from 20 percent of GDP in 1990 to 15 percent currently. Largespreads between positive real lending rates and highly negative deposit rates place asignificant interest burden on business. (Interest rates are expected to rise to 50 percent5

in 2001-02 before they fall again.) Although the sharp depreciation of the Kwacha hasbeen good for export earnings, on balance its effect has been to stifle private domesticinvestment, especially in industry, which depends on imports of capital equipment andintermediate inputs (which comprise 60 percent of total imports). In spite of someliberalization of foreign trade, the ratio of total trade to GDP has increased very little,indicating that the currency depreciation is offsetting the effect of tariff reduction.The inability of the reforms to stimulate private investment is disappointing. Domesticresources for investment remain pitiful: the ratio of domestic savings to GDP averagedless than 5 percent during the 1990s and savings rates of less than 20 percent aregenerally felt to be too low for development. It is unlikely that an increase in borrowingrates will attract significantly more savings into the banks.As a result, the economy remains critically dependent on foreign savings. However,these do not come in the form of direct investment, which is negligible, but in the formof aid, most of which is used to service Malawi’s onerous foreign debt. During thesecond half of the 1990s, the external debt to GDP ratio averaged 235 percent. Thegovernment’s external debt alone is 116 percent of GDP. Servicing this debt absorbs aquarter of export earnings. It is possible that even this worrying statistic paints a moreoptimistic picture than it should, as it applies to debt service actually paid, and maytherefore conceal unpaid debt service and the building up of debt service arrears. Itshould also be pointed out that a debt service ratio of 20 percent plus is a tremendousburden. Few countries can actually pay 20 percent over an extended period, unless aidis provided specifically for this purpose. Even if foreign aid is available to pay foreigndebt service - as it is in Malawi - using it for this purpose means that it is not availablefor other uses. An external debt service ratio above 10 percent can be argued to be amajor constraint on development.At the end of 2000 Malawi was declared eligible for external debt relief under theHighly Indebted Poor Country (HIPC) initiative of the IMF and the World Bank.Eligible countries qualify for debt relief in two stages. First a country has to establish a‘satisfactory track record’, normally of three years, under IMF and World Bankprograms. Thereafter, it must implement a ‘full-fledged poverty reduction strategy’.During the second stage, the IMF and the World Bank provide interim relief providedthat the economy continues to meet conditionality. At the end of this second stage, a‘floating completion point’ is reached, and the remainder of the committed debt relief isgranted. It appears, therefore, that the announced debt relief is some years in thefuture, and highly conditional. Moreover, the assumptions of debt sustainability by theIMF/World Bank may be too optimistic, and, even if they are, Malawi does not meetthe threshold for sustainability because of the volatility of its export growth rate. Thismeans that, even with the debt relief announced at the end of December, Malawi’s debtis likely to continue to rise. This is even more likely, if the country continues toexperience natural disasters and AIDS-related costs. Periodic suspension of aid flows in6

esponse to corruption and other indications of ‘bad governance’ in Malawi act as afurther source of negative external shocks.The main factors contributing to high poverty levels in the country are:• Low levels of education and limited education opportunities for large segments ofthe population. Illiteracy rates are very high.• Ill health, worsened by the effects of the AIDS pandemic and insufficient access tohealth services.• Lack of infrastructure, including limited access to markets.• Lack of transport.• Limited employment opportunities.• Lack of access to credit.• Infertility of soils caused by crop monoculture.• High population density and resultant pressure on land.• Unequal access to productive resources.3.2.3 Public FinanceIn 2000, the Government budget was US$529.4 million composed of US$316.9 million(17.3 percent of GDP) from the Government’s own revenue and US$190.3 million fromgrants. The recurrent budget constituted about 63.8 percent of the total budget. Thebudget deficit excluding and including grants stood at 11.6 percent and 1.2 percent ofGDP, respectively. The large deficit was due to structural weaknesses in the economyand poor macroeconomic and fiscal policies.Coupled with weak macroeconomic and fiscal policies, Malawi has been reeling from ahuge debt burden of up to a debt stock of over US$2 billion. In the year 2000 Malawiqualified for debt relief under the Highly Indebted Poor Countries (HIPC) program. Aspart of the fulfillment of the HIPC requirements, work on formulation of a PovertyReduction Strategy began and is now in final stages. This poverty strategy wouldensure that savings from debt payments should be earmarked for poverty-focusedinterventions. Key economic and social indicators are shown in Section 3.7.7

TABLE 3.2 FINANCIAL INDICATORSItem 1996 1997 1998 1999 2000GDP (constant 1978 prices) (Kw million) 11,443.8 12,240.8 12,509.2 13,012.9 13,316.2GDP real growth (%) 10.5 7.0 2.2 4.0 2.3GDP (current market prices) (Kwmillion)36,454.0 42,310.4 57,319.0 78,544.4 93,292.0GDP per capita (current market prices)(KW)3,837.3 4,407.3 5,848.9 7,854.4 8,987.9Consumer price inflation (%) 37.6 9.2 29.8 44.9 29.6Prime lending rate (%) 26.0 22.0 43.0 47.0 50.0Manufacturing production index(1984=100)120.2 116.3 104.3 98.0 93.1Merchandise exports fob (US$ million) 483 539 539 447 n/aMerchandise imports fob (US$ million) 624 783 579 673 n/aCurrent account balance (US$ million) -176 -263 -43 -151 n/aGross official reserves (US$ million) 218 155 258 244 224Total external debt (US$ million) 2,156 2,259 2,479 2,589 2,706External debt-service ratio 16.8 15.3 18.2 17.7 20.6Exchange rate (av. Kw:US$) 15.3 16.5 31.1 44.2 59.1Source: Reserve Bank of Malawi, Financial and Economic Review, 33(1), 2001IMF, Malawi: Selected Issues and Statistical Appendix, 20013.3 MALAWI POVERTY REDUCTION STRATEGY3.3.1 The Malawi Poverty Reduction Policies and StrategiesThe overall goal of the Malawi Poverty Reduction Strategy is to achieve “sustainablepoverty reduction through socio-economic and political empowerment of the poor”.The general policy and strategy moves away from seeing the poor as helpless victims inneed of handouts and passive recipients of trickle down growth. Instead, the poor areseen as masters of their own destinies. The Government and partners’ role is to createthe conditions whereby the poor can reduce their own poverty. In addition, the policyand strategy is based on:• Action rather than words, where emphasis is on implementation;• Participation of all stakeholders in the design, implementation and monitoring ofprograms;8

• Comprehensiveness in the treatment of poverty where poverty reduction is not aside issue on part of the Government but is tackled by the whole Government andthe budget; and• Social, economic and political empowerment of the decentralized structures wherelocal authorities will play a sustainable part in the implementation of the strategy.3.3.2 Major Intervention AreasThe Poverty Reduction Strategy is particularly based on four major interventions alsocalled pillars of the strategy. The four pillars are as follows:i) Sustainable Pro-poor Growthii) Human Capital Developmentiii) Improving the Lives of the Vulnerableiv) Governance3.3.3 MPRS Recommendations for the Transport SectorThe MPRS accords great importance to the transport sector especially the ruraltransport sub-sector. It has been recognized that rural infrastructure is highly deficient.Modernization of agriculture and the increase and improvement in micro, small-scaleand medium enterprises depend on good passable roads. Rural roads also enable therural poor to access goods and services outside their vicinities, especially markets. Inthe same vein, the MPRS recommends the following:- Construction of new rural feeder roads and maintenance of existing rural roads aswell as improvement of some main roads to ensure access between the rural areasand towns. In that regard, some equipment and institutional arrangements will bebudgeted for and put in place to expedite and sustain the work. Waterways will begiven serious consideration under the poverty reduction strategy.- Promotion of rural transport where an environment conducive to the realization ofincreases in rural travel, both motorized and non-motorized will be created. In somesituations, waterways are the only access routes to important centers of activity andfeeder boats will be required.9

3.4 DESCRIPTION OF TRANSPORTATION MODES3.4.1 Road SectorRoad NetworkMore than 85 percent of Malawi’s population lives in rural areas of varying topographyand hence the majority of people and their goods travel over land by road. Roadtransport is thus the dominant mode of travel in the country, which has an extensiveroad network that reaches the most remote parts. The road network consists of around15 450km of different types of designated roads and it is estimated that there is further±10 000km of non-gazetted roads in Malawi (See Table 3.3).TABLE 3.3 THE NATIONAL ROAD NETWORK IN MALAWIRoad class and typeLength (km)Main / Secondary Roads 6 482,2Tertiary Roads 4 120,9District Roads 3 500,4Urban Roads 1348,0Total all roads 15 451,5The road hierarchy is divided into main roads, secondary roads, tertiary roads, districtroads or rural roads. The main roads, secondary roads and tertiary roads make up theprimary road network that links major urban centers, towns and villages. These alsoinclude roads to neighboring countries. The district roads act as a feeder road networkto the primary road network and are also community access roads.The surfaced main roads that function as major national and international freight andpassenger routes are generally in good to excellent condition with many of them havingrecently been upgraded or resurfaced. Most of the other main roads are unpaved gravelor earth surfaced and these roads are generally in poor condition. Some secondary andtertiary roads are also surfaced, but the vast majority of these roads are unsurfacedgravel or earth roads with conditions varying from good/excellent to impassableduring the wet season. The road network inventory undertaken in September andOctober 2000 of a 50 percent (7 717km) sample of Malawi’s road network reported that70 percent of all surfaced roads are in good condition with only 12.5 percent of thegravel or earth roads in good condition.10

designated gravel or earth surface roads are impassable during the wet season. Detailsof this survey are contained in Table 3.4.All the district/rural roads are unpaved gravel or earth roads, most of which are inpoor condition. They are virtually impassable during the wet season. The accessibilityand mobility of the majority of Malawi’s population is therefore significantly restrictedduring the wet season. There is 1km of road for every 424 people in Malawi comparedto 1km of road for every 211 people in South Africa. Sixty percent of South Africa’spopulation is urban compared to only 14 percent of Malawi’s population, indicating theinadequacy of the rural road network in Malawi. This has a significant impact on thedevelopment of trade and commercialization.The road network in urban centers is mostly surfaced and in average to good condition.Many of these roads have been upgraded recently. The outlying urban areas withbitumen roads are still in need of upgrading. Urban gravel roads are in need ofupgrading.The disparity which exists between the condition of the paved and unpaved networksand the urban and rural networks is attributed to past emphasis on capital investmentsin the paved network. With the inception of the NRA in 1998, there has been a vastimprovement in the primary road, the district road and the urban road networks. Evenwith improvements in the rural road networks, general accessibility to the rural areas isstill very poor. Mobility is essential for the growth of all forms of informal trade.Traffic and TransportationFor the majority of the country’s rural population the only means of transport iswalking, head loading, bicycles and animal-drawn carts. Motorized private and publictransport in the rural areas is virtually non-existent mainly due to the poor condition ofthe rural road network, particularly during the wet season. This hinders the movementof the cash crop economy and the informal trade sectors of Malawi.For the majority of the urban population, walking and head loading are also one of themajor forms of transport owing to the poor disposable income levels of many citydwellers. Bicycles, minibuses, taxis and buses make up the other main forms of urbantransport.Car availability in Malawi is very low at an estimated 19 vehicles per 1000 population,with the vast majority of these vehicles located in the urban areas. This is based on aregistered vehicle fleet of 201 520, (of which 10 percent is owned by women), as of 30September 2001 and an estimated 2001 population of 10 500 000 (of which 51 percent arewomen) based on the 1998 census results. Bicycle ownership in the rural areas is 424bicycles per 1000 population compared to 307 bicycles per 1000 population in the urbanareas of which 15 percent is owned by women. Animal drawn cart ownership of 5612

carts per 1000 population in the rural areas is more than double the 25 carts per 1000population in the urban areas. Women own less than 2 percent of these carts in both therural and urban areas.There is some traffic congestion along the primary road network outside of the urbanareas. This congestion is usually localized and is caused by vehicles waiting to turnright, slow moving vehicles up steep grades, poor road surface conditions orpedestrians, cyclists and animal drawn carts in the roadway.In the smaller towns, there is often congestion on the main road through the townthroughout the day due to a combination of vehicles slowing down to turn, poor roadsurface conditions, pedestrians, cyclists and animal drawn carts in the roadway andstreet traders too close to the edge of the road. This is obviously exacerbated on marketdays.Urban road development in Malawi is inadequate, with poor future planning which hasled to:• Congestion on the roads• No pedestrian walkways• No provision for cyclists• Poor surface conditions• Poor law enforcement• Lack of enforcement of town planning regulations with regard to building layouts• Lack of capacity at intersections• No provision for the burgeoning minibus population• Access positions and off-street parking requirements and minibuses stopping in theroadway to pick up or off load passengers• Virtually no formal minibus and taxi ranks in the urban areas result in these publictransport vehicles ranking along major roads often close to busy intersections• Taxi and minibus ranks that have been constructed in the larger commercial centersare having a significant adverse impact on traffic flows along the major roadsWith the exception of a few privately owned vehicles in the urban areas, vehicleoccupancies both in the rural areas and the urban areas are generally quite high duringpeak periods. Minibuses, which are unsubsidized and highly profitable, tend to oftencarry more than their capacity on both long haul and short haul trips throughout the13

country. Capacities of some subsidized rural bus services operate at below 50 percentcapacity. The capacities of the international bus services are also generally quite high.The introduction of minibuses into the transport sector over the past five years hasgreatly improved the accessibility of the average Malawian to travel (subject toavailability of fares).Road Safety and Law EnforcementIn 1994 the death rate on Malawian roads was reported to be 200 deaths per 10 000vehicles which was almost 6 times the average for SADC. Accident statistics for theperiod 1998 through to 2001 indicate that the death rate is now between 35 and 40deaths per 10 000 vehicles. Whilst this is a significant improvement on the 1994 rate andis closer to the average SADC rate, it is still considered to be high by world standardsTable below refers.TABLE 3.5 DEATHS PER 10,000 REGISTERED VEHICLES; 1995 – 2000Year Total No. of Deaths TotalVehiclesRegisteredDeaths / 10 000Registered Vehicles2000 676 191 920 35,21999 479 178 755 26,81998 593 166 629 35,61997 784 154 052 50,91996 1 088 145 126 75,01995 1 142 102 944 111,0The main reasons given for this high accident rate include the following in order ofpriority (1997 Transport Statistics):• Driver behavior/negligence• Animals, cyclists and pedestrians in roadway• Speeding• Roadworthiness of vehicles• Overloading• Condition of road surface• Drunk walking and drunk driving14

The lack of effective law enforcement is, however, the overriding factor for the abovecauses.A new computerized national traffic information system known as MalTIS has recentlybeen implemented by the Ministry of Transport and Public Works’ Department of RoadTraffic. The system is based on the South African NaTIS system and will include thefollowing:• registration of all driver licenses• registration of all vehicles• an accident database• a record of road traffic fines by vehicle and driver license and the payments of finesThe registration of all driver licenses is presently being implemented. This new systemwill assist in the control of fake driver licenses, stolen vehicles and fine payments all ofwhich are problematic in Malawi.Rural TransportRural transport is one of the most sensitive transport issues in the country. The vastmajority of the population is rural yet this sector of the population is the least accessibleand the least mobile. There have been several attempts by various governmentdepartments and aid agencies to initiate motorized transport in the rural areas.Unfortunately the economics are against any sustainable motorized transport in therural areas due to the poor condition of the rural road network that result in highoperating costs, low residential densities that result in long travel distances with lowpatronage and a low disposable income. Even the subsidized motorized transportsystem is not sustainable in the long term.There have also been attempts to improve accessibility and mobility of the ruralcommunity by constructing footpaths, cycle ways and narrow river crossings and alsoby using alternative non-motorized transport. Most of these initiatives have also provedto be unsustainable. Where they have succeeded, funds have not been available for anyexpansion. In some cases, rural communities have not supported these initiatives.In Malawi, as in most African countries, intermediate means of transport such aswheelbarrows, oxcarts and bicycles have not been developed because of the biastowards the development of conventional motorized means of transport, which are inmost areas unaffordable.15

Labor Based Rural Road MaintenanceMalawi has a road network of over 15,000km, of which approximately half is low-trafficdistrict roads. These are mainly earth roads linking rural communities to the primaryand secondary road network. A large proportion of the district network is in poorcondition, with many roads impassable, particularly in wet weather.The National Road Authority is responsible for managing the rehabilitation andmaintenance of roads using funds raised from road user chargers (mainly a tax on fuelsales). These funds are deposited in the national Road Fund, which is under the controlof the Road Board. Annual maintenance plans produced by the NRA are subject toapproval by the Road Board and by the Ministry of Transport and Public Works.The NRA has two technical divisions within its Operations Department: Central RoadsDivision and Urban/District Roads Division. These two divisions are responsible formanaging the maintenance of the “core road network” of 7,200km. This includes about6,000km of primary, secondary and urban roads, and about 1,200km of thetertiary/district roads 1 . Roads that are not on the “core network” receive no fundingfor maintenance from the Road Fund.Maintenance and improvements to district roads are therefore dependent on smallgovernment allocations to District Assemblies, and public works projects funded byMASAF 2 and non-governmental organizations. Public works projects are supported bydonors, and are part of Malawi’s social safety nets program. Though designed toalleviate poverty through providing employment, these public works programscurrently have an important role in the rehabilitation of district roads. Road worksprovide a substantial proportion of jobs created in rural areas.Maintenance contracts on the “core network” are let centrally by the NRA throughcompetitive tendering. Most of the routine maintenance work is undertaken bymedium-sized local contractors who use equipment-based methods. Despite thesuccess of the District Roads Improvement and Maintenance Project (DRIMP), whichwas implemented nationally in the 1970s and 1980s and used labor-based methods,these techniques have not become entrenched in the road sector in Malawi. This waslargely due to the centralization of government functions from the early 1980s,reduction in the responsibilities and capacity of local government, and general neglectof the district road network following DRIMP.Following the restoration of democratic government in 1993, the governmentannounced its intention to implement a new decentralization policy. The intention wasto devolve political and administration responsibility to the district level. The National1 Highlights on National Road Authority. December 2001. Unpublished.2 Malawi Social Action Fund -World Bank, DFID (UK) and Malawi Government funding.16

Decentralization Policy was approved by the government in 1998. Subsequently,Parliament passed a new Local Government Act, which enshrines the policy. Thegovernment is now progressively devolving responsibilities in accordance with districtcapacity.The Local Government Act allocates responsibility for the construction, rehabilitationand maintenance of district roads “not under Central Government” to the DistrictAssemblies. The Act envisages that District Assembly activities will be funded bylocally generated revenues and central government transfers. This includes fuel levies.As capacity develops in the districts, it will be necessary for the NRA to devolveresponsibility for the maintenance of district roads, and to provide funding to thedistricts from the Road Fund.The devolution of responsibility to the districts, and the creation of democraticstructures at area and village level, should result in more transparent and rational useof development resources, including road maintenance funds. With increasedcommunity involvement in the planning processes, it is more likely that the real needsof communities will be met. But the available resources for road maintenance willlikely be inadequate for many years to come. It will therefore be important to maximizethe use of local resources, including the development of local contractors and the use ofmore labor-based techniques. In addition to increased social and economic benefits dueto improved access in rural areas, the use of labor-based techniques will bring addedbenefits to local communities through increased employment opportunities.PlanningDue to its dominance as a mode of transport, there are extensive short, medium andlong term plans for the improvement of Malawi’s road network and other roadtransport infrastructure. The majority of the National Transport Policy Action Planshave been developed to address the strategies and policies for Roads, Road Transportand Road Traffic. These action plans include the following with regard to the roadnetwork, road transport infrastructure and transportation:• Upgrading the major road network and constructing new roads where economicallyand environmentally justifiable.• Vigorous enforcement of road laws and road safety measures.• Increased involvement of the private sector in all aspects of constructing andmaintaining the road network and road transport infrastructure.• Parking control in urban areas.• Facilitating initiatives for improved rural accessibility and mobility includingupgrading the rural road network and rural transportation programs.• Supporting the development of a sustainable Malawian trucking industry.17

The NRA also has a Road Sector Investment Program for the period 2000 to 2010 thatcontains plans to implement some 105 road and bridge improvement projects duringthis period. These projects, however, concentrate on the periodic maintenance and therehabilitation/reconstruction of the main road network, the upgrading from earth tobitumen of the main road and secondary road network, the rehabilitation of urbanroads and the replacement and/or widening of bridges. These projects are expected tobe donor or Bank funded.The Road Traffic Directorate is in the process of preparing a Strategic Plan for theperiod July 2001 to June 2006. This plan is due to be published at the end of November2001.Structure plans that have been prepared for the larger cities and towns all includeplanning for road widening, pedestrian and cyclist facilities and bus, minibus and taxifacilities. The country plans also include recommendations for road, cyclist andpedestrian infrastructure improvements.The Department of Road Traffic plans to include the registration of vehicles, theaccident database and the record of fines and the payment thereof into the MalTIStraffic information system over the next five years.The NRA has medium and long term plans (2006 to 2031) to upgrade 978 km of Districtrural roads from earth to gravel surface. It would appear that apart from a few ongoinglocalized rural transportation projects, there is no nationally coordinated plan for theimprovement of rural mobility and accessibility in the short to medium term.Economic PolicyThe National Transport Policy formulated in 1999 sets out the government’s objectivesand strategies in this sector. The aim is to create a favorable environment for theprovision of transport services by improving efficiency, increasing competition, andencouraging private-sector participation. The government has also produced an actionplan for the implementation of policies.Transport is an important sector in the national economy. From 1996 to 2000, itscontribution to GDP at constant prices averaged 4.4 percent per annum, and in 2001/02it received 6.6 percent of the national budget. Malawi has an open economy, foreigntrade amounting to 61 percent of GDP in 2000. The transport system naturally isresponsible for moving foreign trade, and therefore its efficiency is an influential factorin determining the cost of imports and the competitiveness of exports.The government has recognized the importance of an efficient transport sector in theachievement of its economic and social objectives. Various reforms have been18

introduced: the sector has been liberalized, and the policy is to encourage inter-modalcoordination in order to achieve an efficient distribution of traffic among the modes.The principles have been accepted of full-cost coverage by each mode, and the limitingof subsidies to non-profitable services provided in the social interest.Various economic statistics collected (shown below) show that goods traffic conveyedby rail has increased from 1997 onwards and that in 2000 it exceeded its 1990 level; thatgoods traffic by air and on lake services fell during the 1990s; and that rail and lakepassenger numbers both fell during the 1990s. Lilongwe International Airport recordeda decrease, and Chileka (Blantyre) International Airport an increase, in passengernumbers during the 1990s. Cross-border tonnages conveyed by road were up in 2000 ascompared with 1999. Malawi’s main exports and bulk imports are related to theagricultural sector, and volumes consequently will depend on climatic conditions withvariations from year to year. There are no development projects at present in theagricultural sector, which will generate any substantial increased traffic, but in themanufacturing sector exports of textiles and apparel are expected to rise as a result ofMalawi’s beneficiary status under the US Africa Growth and Opportunity Act. Thedevelopment of the tourism industry could boost passenger traffic considerably. Aprivate Sector Development initiative is under way in Malawi focusing on the sugar,cotton and textiles, tea and coffee, tourism and tobacco sectors. It is envisaged that theseindustries show the most potential for growth. The critical issue is the cost of transport.For Malawi to remain in the international markets they need to be more competitivethan the other competing LDCs.Operating CostsHigh unit cost of road transport is one of the key barriers to competitive trade inMalawi, as compared to the other countries. This is mostly brought about by thecountry’s landlocked status and the monopoly enjoyed by local transporters, whichprevents market forces from operating where international haulers are concerned.Key factors increasing Malawi’s unit cost of transport are:! Distance from Markets! Taxes on imported trucks and spare parts! Costs of fuel! Inadequate backhauling arrangements! Low levels of exports! Too much time spent off loading! Demand concentrated in certain months! Monopoly on the part of local transport operators! High interest rates! The instability of the Malawi Kwacha! High inflation! Failure of CEAR to operate on maximum capacity19

International haulers are precluded from operating within the Malawian borders.Malawian haulers charge US140c/ton/km. The average cost of haulage to RSA isUS70c/ton/km. It is estimated that if the internal Malawian market was opened to theregional haulers, this charge per ton would be reduced to by close to 50 percent.The local hauler market is protected to create internal local haulage capacity. The localmarket is however subjected to high-level political interference. Over the years, manyof the decision makers have had personal interests in the trucking business. The highoperating cost that Malawian haulers are subject to make it difficult for them tocompete regionally. The main cross border business run by Malawian haulers is thefuel cartage where price is not always the key issue (it faces political interference). Untilrecently, fuel haulage was completely controlled by PCC. It is now run by FuelImporters Limited (FIL). This has removed some of the levels of corruption but not all.Few foreign haulers are involved fuel cartage.According to the Road Transport Operators Association (RTOA), prices were liberalizedin 1996. RTOA recommends to its members what rates they should charge. However,owing to the highly competitive nature of the business, recommended rates are notoften adhered to. Rates, however, still sit at levels way in excess of what theinternational companies charge. This demand is made worse by the under performanceof the local rail company which should have increased the competitiveness of theindustry.The fundamentals of the Malawian economy, i.e. high interest rates; high inflation;unstable exchange rates, high taxation; high tariffs, high costs of spares and vehicles etc,are all higher than in the other countries in the region.Other factors effecting cost of transport area:! Low levels of exports! Shortages of loads to backhaul! Slow off loading times (demurrage charges) caused by inefficiency of the freightforwarders and Customs.! Slow turnaround times. This decreases the number of round trips per month andtherefore increases the costs to the customer.! No bases in Mozambique, South Africa and ZimbabweSecond-hand trucksThere are no restrictions on the importation of second hand trucks. This has led to aproliferation of second hand trucks in Malawi. These trucks are not well maintained ,suffer large amounts of down time, and have increased the accident rate in Malawi.Malawi is literally becoming a dumping ground for South African second-hand trucks.These trucks, instead of providing a more competitive alternative, actually cause greater20

overheads and difficulty in obtaining business, even at lower rates, because of theirunreliability.According to RTOA, fuel taxes were more or less the same as the neighboring countrieswith the exception of South Africa; but data was unavailable to verify this. In the caseof Malawi, fuel taxes include custom and excise duties, the fuel levy used for roadmaintenance and the maize levy. Fuel taxes for Malawi account for 52.1 percent of theprice.RatesRates vary in Malawi on the local routes from Kw5.50-Kw9.00 /km/ton. The averagerate charged is Kw7.50/km/ton. The South African local rate was quoted to be atKw3.50/km/ton.With Malawi being essentially an agriculturally based economy, there areconcentrations of demand at certain times of the year, which result in higher rates beingcharged during these periods. This includes the importation of key inputs to farm gate,as well as the export of the commodities. This situation is often compounded byshortages of maize, as is the situation in Malawi at present.Local haulers are considered to be as efficient as international haulers at back hauling.International transport operators have an edge logistically over their Malawiancounterparts because the rates are dictated by inbound cargo, which is the basis onwhich rates are calculated. As mentioned previously, Malawi is a net importer. Thus,the international operator is already assured of covering their margins, and loadsnegotiated from Malawi are a bonus. The scenario is quite different for the localoperator. The operator’s outbound trip carries cargo of a lesser value, which reducestheir profitability. Malawian haulers are not well placed to market themselves in SouthAfrica to obtain return loads. The time it takes Malawian haulers to secure back loadsseverely reduces their turn around times. There are, therefore, few operators fromMalawi who run the South African routes. Malawian operators without depots inZimbabwe or South Africa face problems managing breakdowns, difficulties at borderposts, marketing etc. Local operators concentrate on the Beira route. Of the localhaulers, only three continuously haul cargo to South Africa. These are mainly haulerswho have sister companies regionally. RTOA estimates that about 65 percent ofMalawi’s international trade by road is carried by international operators.Managing backhauling has a major impact on rates. The cost of the inbound haulage istwice the cost of outbound haulage. The haulage is generally managed by freightforwarders and by the government where maize, fuel and fertilizer are hauled.Forwarders could balance the trend by arranging loads for Malawian haulers to pick upin other countries like RSA, upon delivery of Malawian exports.21

GoM also makes arrangements inefficient by not synchronizing imports and exports soas to capitalize on back haulage and its price-lowering effects.Comparative diesel fuel costs (US cents/liter) are RSA 32, Kenya 59, Tanzania 65,Zambia 73, and Malawi 58.Rates for goods and passenger transport were controlled until 1994, but were thenderegulated and are now set by market forces. Foreign haulers dominate goodstransport. In terms of SATCC policy, Malawi has bilateral road transport agreementswith its immediate neighbors as well as with South Africa. Cabotage is not allowed, butthe third-party rule operates, i.e., Malawian exports to Zimbabwe via the Tete Corridorcould be carried by Malawian, Zimbabwean or Mozambican haulers. Malawianoperators are mainly small scale (owning a few vehicles each); but even the few largelocal haulers have higher operating costs than their foreign competitors, and find itdifficult to match them on cross-border routes. A significant disadvantage faced byMalawian haulers on cross-border routes to Harare and Johannesburg is that they donot have a network of servicing depots. This means that they cannot compete in termsof reliability, and customers therefore prefer to use foreign carriers. The cabotage rule isadopted as a protective device for domestic haulage.The road network is the most extensive of all modes, and government policy is toexpand it in order to open isolated areas, correct interregional imbalances, andstimulate agricultural output, thereby helping to reduce poverty. Expansion in therural areas will result in the loss and degradation of some natural resources like landand forests through road construction and the deforestation that follows thedevelopment of roads in Malawi. Efforts should be made to ensure minimumdestruction. Clear methods of rehabilitating degraded areas should be laid down.Before transport was deregulated, the few large bus operators were authorized to run60 percent of their mileage on profitable and 40 percent on unprofitable routes: primeroutes were to cross-subsidize the others. However, because control was difficult, theratio in practice was about 90:10, and rural areas were poorly served. Sincederegulation, the position has not changed because of poor rural roads and low levels ofpatronage. Passenger transport permits now allow operators to ply any route; there is aconsequent lack of order, and pressure is mounting for the government to stipulateroutes.Road transport has gained traffic from rail. There is considerable overloading, which islargely uncontrolled because of the lack of weighbridges. Overloading compromisespavement conditions, but an attempt is being made to rectify this situation with EUfunding. GVM is not differentiated according to road type, and there is under-recoveryof user costs. The official line is that Malawi should adhere to SADC and COMESAstandards on GVM and axle loads.22

InstitutionalThe Ministry of Transport and the Ministry of Works and Supplies were merged intothe new Ministry of Transport and Public Works in 1999. Apart from meteorology andthe usual administrative, financial and accounting, and human resource divisions, thedepartments dealing with transport per se are Transport Planning, Public Works, RoadTraffic, Marine Services and Civil Aviation.ManagementResponsibility for the road transport sector is divided among three entities, namely:• The Department of Road Traffic: This is responsible for administering the RoadTransport Act of 1997 and for safety issues. The department is responsible forvehicle registration, testing and licensing; driver training, testing and licensing;operators’ permits; and related authorizations. It implements the policies of thegovernment, SATCC and COMESA, and is the technical and executing arm of theministry in this respect. It is in direct contact with the road transport industry. Withliberalization of the transport sector, the department’s capacity has not increasedcommensurately and it has therefore been unable to execute its statutory mandateadequately. Systems are at last being computerized, but in the meantime, there hasbeen a proliferation of fake licenses, vehicle registrations, certificates ofroadworthiness, and so on. Controls are gradually improving with the issuing ofthe SADC drivers’ license, the registration of number plate manufacturers, etc.However, police remain poorly trained in traffic management, and there is nodedicated traffic police staff. The department is also responsible for urban traffic,but this is to be taken over by local government. In terms of the Road Traffic Act,the vehicle inspectorate and some other functions are to be privatized, and thedepartment will concentrate on its core functions.• The Directorate of Roads: This falls under the Department of Public Works. Thedepartment is the advisory body to the minister, but the National Roads Authority(NRA) is the implementing body. The department transmits proper standards andspecifications to the NRA, and fulfills a watchdog role. It also liaises with SATCCand COMESA.• The NRA: This was established by an Act of Parliament in 1997. It is responsible forroad maintenance and the development program. It reports to a Board, which inturn is responsible to the minister. The NRA’s task is to implement policy andstrategies set by the ministry. It manages new construction projects andmaintenance. Although its mandate is for main, secondary and tertiary roads, it alsomanages maintenance for the urban and district networks, since local authoritiesand district assemblies do not yet have the financial and technical capacity to takeover this function. All these responsibilities have not been accompanied by anincrease in staff, market related remuneration packages. The management capacityof the NRA is still stretched, especially with regard to inspectors. This isexacerbated by the fact that there is a serious lack of capacity among local23

contractors and consultants who are also short of inspectors. The NRA is fundedfrom the fuel levy. It has taken over vehicle overloading control and the operationof weighbridges from the Directorate of Roads.The NRA also maintains roads in the national parks on behalf of the Ministry ofTourism. These are not classified as public roads. The ministry receives a budgetaryallocation for this purpose, but roads need to be upgraded to all-weather gravelstandard if tourism is to be promoted as a year-round activity. The present position,with the NRA acting as agent for the ministry, is the preferable management option;the alternative would be for the NRA to take over the roads, but this would theninvolve two ministries with jurisdiction in the national parks.PlanningThe total length of designated road network increased at a rate of 2.7 percent between1990 and 1996 to 15,999 km. Since then the length of designated road network hasdecreased slightly to the current length of approximately 15,450 km, which represents adecrease of 0.7 percent per annum for this period. It is assumed that one of the mainreasons for this decrease is the lack of maintenance. This has resulted in some of thedesignated roads being de-proclaimed. With the lack of funds available for rural roadmaintenance and no plans for new road construction in the foreseeable future, thedesignated road network is forecast to continue to decrease in the short to medium termat a rate of 1 percent per annum.The total number of vehicles registered in Malawi between 1990 and 2000 has increasedat a rate of around 6 percent per annum. The annual increase in the rate of vehicleregistrations is forecast to slow slightly to around 5 percent per annum for the shortterm and 4 percent per annum in the medium to long term. This reduction in the vehicleregistration growth rate is attributed to the general economic slow down in the shortterm and the impact of AIDS in the medium to long term.Whilst there is extensive recent traffic flow data available on most of the road network,there is no comparative historic traffic flow information available in order to be able toestimate a reliable national traffic growth rate. Based on the vehicle registration androad network statistics, it has been assumed that the traffic flows in the urban areas andon the main roads in the rural areas have increased at a rate of at least 5 percent perannum over the last 10 years. This is consistent with traffic growth in the semi-rural andrural areas of South Africa. An average increase in traffic volumes of around 5 percentper annum is forecast on the designated road network in Malawi in the short tomedium term.Congestion and delay in the urban areas are expected to continue to increase as trafficvolumes increase and with no immediate plans to upgrade and improve the busier24

oads and intersections. Existing congestion and delay are also forecast to increasealong the main road network in the rural areas as traffic volumes continue to increaseand the rural car fleet continues to get older.Due to the poor condition of the rural road network, it is assumed that the traffic flowson the district roads have remained static or have decreased slightly over the past 10years. Due to the continuing deterioration of the rural road network it has beenassumed that the traffic flows in the rural areas will continue to decline in theforeseeable future. As there is no comparative historical traffic data on which to validatethis forecast, a rate of decline is difficult to estimate. This does not bode well for privatesector development and trade.The number of passengers transported by bus in both the rural areas and the urbanareas has declined over the last 5 years mainly due to the use of minibuses for publictransport. On the subsidized low patronage routes where the road network is verypoor, bus services have been withdrawn and patronage has remained fairly static. Thenumber of bus trips and the patronage of bus as a mode of transport are not forecastedto increase significantly in the foreseeable future.The introduction of the minibus as a public transport mode has seen the number ofthese vehicles increase significantly since 1995 as has the number of passengerstransported by minibus in the rural and urban areas, for commuter trips and long haulinter-city trips. The use of this mode is forecasted to continue to increase resulting in anincrease in the number of minibuses providing this service. There is no comparativehistorical traffic data on which to validate this assumption.Strengths and WeaknessesInfrastructure: The major strength with regard to road infrastructure is that thedesignated and non-gazette road network is very extensive and reaches the remotestparts of the country. The majority of the paved main road network is in fair to goodcondition; particularly the main freight and passenger routes and the road network inthe major commercial centers.The steady increase in the registration of vehicles will result in increased car availabilityand an increased use of motorized transport in both the urban and rural roads. A fairlyhigh bicycle ownership indicates that the majority of the population is improving itsmobility above walking and head loading.A major weakness with regard to road transport infrastructure is that the vast majorityof the gravel and earth roads are in fair to poor condition with almost half of theseroads impassable during the rainy season. The rural road network is in very poorcondition and there appears to be no planned improvement of this network in the shortto medium term. Rural accessibility and mobility is thus seriously compromised by the25

poor condition of the rural road network. Whilst there have been initiatives to improverural transport, these initiatives have either not been successful, have not beensustainable or a lack of funding has restricted their expansion. To create private sectorled growth and improve the informal and formal trading sector, this situation must becritically addressed.There is very little cycle and pedestrian infrastructure in the rural and urban areas forthese two major modes of travel in Malawi.Congestion in the major commercial centers will affect urban accessibility and mobilityand will increase transport-operating costs.High fuel and vehicle maintenance costs result in high costs of private transport andhigh public transport fares, which has an adverse impact on the overall mobility of thenation.Malawi has a poor road safety record in international terms although it is better thanaverage for Sub-Saharan Africa. The lack of effective law enforcement is one of themajor road transport weaknesses in Malawi. Engineering improvement of black spots isalso virtually non-existent. Overloading of heavy vehicles is damaging the roadnetwork and the diverse traffic mix also has an overall adverse impact on roadtransportation.Planning: The strengths of the future planning for road transport infrastructure andservices in Malawi is that the action plans developed to address the requirements of theNational Transport Policy are extensive and comprehensive. The NRA’s Road SectorInvestment Program for the period 2000 to 2010 is also extensive and comprehensiveand based on sound technical and social factors. The investment program is also wellsupported by the donor agencies.A strategic plan for the Road Traffic Directorate, together with the plannedimplementation of all aspects of MalTIS to address the existing poor control of vehicleand driver registrations and to assist in law enforcement, is also a significant strength.The structure and development plans for the towns and cities include recommendationsfor road transport infrastructure.The lack of accessibility and mobility of the rural poor has been identified by thegovernment as an area that needs to be addressed.Weaknesses in the transportation planning sector with respect to infrastructure andservices include the lack of funds to implement many of the action plans to address thestrategies in the National Transport Policy document.26

Whilst there have been plans to provide cycle and pedestrian infrastructure in the ruralareas as well as in the urban areas, a lack of funding has resulted in none of these plansbeing implemented.The lack of funding available for the city, town and district assemblies to implement therecommendations contained in their structure and development plans, as well as thecountry plans, is also a major weakness.The NRA does not have any short-term plans for the upgrading and improvement ofthe rural road network.Economic Policy: Road transport offers a number of economic advantages over otherforms of transport, namely door-to-door delivery, thereby obviating transshipmentcosts, reducing transit times and perhaps the cost of holding inventories; routeflexibility; and easier access to remote areas. However, the social costs of road transportare greater than those of other modes – high accident rates resulting in fatalities andsevere injury with consequent loss of production, external costs such as air and noisepollution, congestion costs and so on. Other potential environmental costs include landand forest degradation and increased runoff, which promote erosion when new roadsare opened and the surrounding deforestation that follows all increased usages of ruralroads. Malawi has high accident costs (an EU-funded study in 1995 put them at 14percent of GDP) because of the lack of enforcement of safety standards, and other highexternal costs that are inflicted on small vehicles because of the mismatch between axleloads/GVM and road and bridge design standards. Many bridges have collapsed as aresult. These are weaknesses.Policy, by failing to recover full user costs, skews competitiveness in favor of roadtransport, thus distorting the inter-modal division of traffic although this has beenexacerbated by management and infrastructural problems on rail and lake transport.Budgetary allocations for routine road maintenance fall short of requirements (Kw 1.8billion as against Kw 2 billion), but this excludes rehabilitation and re-engineeringrequirements that amount to another Kw 2 billion. These should be recovered throughuser charges. This would be mainly in the form of the fuel levy. The current level ofthe levy appears too low to support an adequate self-financing Road Fund. Anotheroption would be to commercialize the management as well as construction andmaintenance of roads. This could be done by concessioning road construction,operation and maintenance to the private sector through arrangements such as buildowntransfer or build-own-operate. It is inequitable for the central budget to financethe infrastructure for only one mode of transport when other modes have to finance itthemselves. The exception in the case of roads would be for rural feeder roads andtracks. The above figures exclude the maintenance requirements in respect of ruraltracks and the need to replace these tracks with roads in order to facilitate marketing of27

agricultural produce; for the same reason bridges are required which are able toaccommodate 7-ton trucks. To the east of the lake and to the north of the NyikaPlateau, rural areas cannot even be reached by 1-ton trucks because of the poor roads ortracks.Vehicle operating costs are very high; hence transport costs are high, and this increasesproduction costs. Because import volumes exceed export volumes, there are fewbackhauls, and therefore rates are higher than for South African transporters.Institutional Management: There has been a general improvement in the institutionalstructure and management of the transport sector following on from the mergerbetween the Ministry of Transport and the Ministry of Works and Supplies, and thecommercialization of various activities. However, there are constraints, which remainto be removed in all sub-sectors.A general weakness throughout the Malawi economy is that costs are high relative tomuch of the Southern African region. In the transport sector, costs are high because oflandlockedness and the distortion in the use of transport modes and routes. The sector,which should be able to generate growth, namely tourism, also suffers from high costs.Transport is a contributory factor; but from a marketing angle, Malawi has failed totarget the appropriate niche markets for its major attractions, which are the lake, gameand forest reserves, national parks, and Mt. Mulanje. Between them, the transport andtourism sectors could significantly improve rural livelihoods by providing adequateinfrastructure and services, as well as accommodation at regionally competitive rates.The two sectors will have to compliment each other so that developments in each do notresult in negative development of the other. The tourism sector in Malawi solelydepends on environmentally fragile areas, which developments in the transport sectorhave to consider.The major strength of the road haulage industry is that it is in the hands of the privatesector whereas its major competitor, namely rail, has until recently been wholly ownedby the government and, although commercialized, has not had the same competitivecutting edge as is found in the private sector. Moreover, the road transport industry isformed into a strong association with its own secretariat, which is able to lobby andindeed advise the government. It also appears to enjoy significant political support.From an institutional point of view, the road sector has gained, particularly from theestablishment of the National Roads Authority (NRA), which has provided a morefocused approach to the provision of new road infrastructure and the maintenance ofthe existing network. Despite the institutional and managerial advances, however,there are still significant weaknesses in the management of the road sector. This stemslargely from a lack of funding which in turn means that there is a shortage of capacityin the NRA and also in the Directorate of Road Traffic. It is the weakness in the latter,which has very serious consequences because of its inability to control abuses of the28

system. These occur with regard to vehicle registrations, certificates of roadworthiness,drivers’ licenses, driving standards, speeding, recruiting and training of traffic police,heavy-vehicle overloading, corruption and so on, and all these abuses have led to a lackof security in road transport, low safety standards and concomitant high accident rates.With accident costs being the equivalent of about 14 percent of GDP, they clearly havehigh opportunity costs. Improved road safety could release resources for moreproductive use, and this could contribute to poverty reduction. Local authorities havelacked capacity to assume responsibility for urban traffic, and there is inadequatecoordination with these authorities. Thus, town-planning problems have occurred, andtraffic congestion has become serious in Blantyre and Limbe.Malawi Rural Travel & Transport Program (MRTTP)This program was developed by the government together with the SSATP of the WorldBank and the RTTP of UNECA. Its main aims were to establish a clear Rural Travel andTransport Policy as a sub-set of the National Transport Policy, to promote rural traveland transport programs, to achieve integrated planning and rational allocation ofresources for the sub sector, to promote sustainable rural Travel and TransportInfrastructure, to increase the availability of means of travel and transport and topromote gender equity in Rural Travel and Transport.The program has been on going for two years. Although it has had a focus of reducingrural poverty and sustaining rural livelihoods, its success has been very limited becauseof:• Lack of clear policies to address rural transport problems• Lack of appropriate technologies• Lack of priorities to this sub-sector• Lack of planning and financing for the adoption of appropriate technologies• Lack of strong institutional framework• Lack of coordination and wide dissemination of information on availabletechnologiesA steering committee at principal secretary level composed of various stakeholders wasestablished to provide policy guidance and program oversight with the followingfocused benefits:• Improved access and mobility and easier access to social and economic services forrural communities• Increased use of appropriate means of transport for the rural communities• Creation of an enabling environment for coordination between governmentministries and departments helping them to develop their capacities more efficiently29

• Application by the staff at district level and that of local authorities of gainedknowledge and skill from the integrated rural accessibility planning method• Promotion of Environmental Impact Assessment (EIA) in the construction andmaintenance of Rural Transport Infrastructure.Although the MRTTP Program has had these focused policies, it continues to sufferbecause of lack of funding especially funds required to reach the grass roots. A PublicExpenditure Review in 2000 showed that in some sectors up to half the allocatedresources were spent around the sector headquarters only. This is a problem whichneeds to be addressed. Another problem facing the program is the shortage ofpersonnel. The program was originally meant to have an accountant, a civil engineerand a program coordinator at headquarters. However, the program coordinator whohas since left the program has not been replaced and the accountant post is yet to befilled.TABLE 3.6 THE NATIONAL ROAD NETWORK IN MALAWIRoad class and typeMain / Secondary RoadsTertiary RoadsDistrict RoadsUrban RoadsTotal all roadsLength (km)6 482,24 120,93 500,41348,015 451,530

TABLE 3.7 ROAD NETWORK INVENTORY AND CONDITION DATABASE(50 PERCENT OF TOTAL ROAD NETWORK)Surface type Condition Rural Urban Total PercentGood 1686.38 102.52 1788.90 70.1%PavedFair 561.72 48.78 610.51 23.9%Poor 123.05 31.05 154.10 6.0%2371.15 182.35 2553.51 33.1%Good 632.66 13.00 645.86 12.5%UnpavedFair 2077.38 6.87 2084.25 40.4%Poor 2412.92 20.56 2433.48 47.1%5123.16 40.44 5163.59 66.9%All Roads 7494.31 222.79 7717.10 100.0%Urban/rural Condition Paved Unpaved Total PercentGood 1686.38 632.86 2319.23 30.9%RuralFair 561.72 2077.38 2639.11 35.2%Poor 123.05 2412.92 2535.97 33.8%2371.15 5123.16 7494.31 97.1%Good 102.52 13.00 115.52 51.9%UrbanFair 48.78 6.87 55.66 25.0%Poor 31.05 20.56 51.61 23.2%182.35 40.44 222.79 2.9%All Roads 2553.51 5163.59 7717.10 100.0%Condition All roads PercentGood 2434.76 31.6%Fair 2694.76 34.9%Poor 2587.58 33.5%Total 7717.10 100.0%ConditionDefinition(Paved roads)Definition(Unpaved roads)Good 9.0 IRISource: NRA31

TABLE 3.8 TOTAL VEHICLE REGISTRATIONS ON31 DECEMBER OF YEAR AND VEHICLE OWNERSHIP(1990 – 2001)Year Total No. of VehiclesRegistered in YearTotal VehiclesRegisteredVehicle Ownership(Veh / 1000 Persons)9/2001 ±9,600 201,520 19.22000 13,165 191,920 18.61999 12,126 178,755 17.61998 12,577 166,629 16.81997 8,926 154,052 16.11996 11,411 145,126 15.51995 8,078 133,715 14.61994 4,292 125,637 14.01993 4,144 121,345 13.81992 8,091 117,201 13.61991 6,166 109,110 12.91990 4,683 102,944 12.4Notes: (1) Above figures represent the total number of vehicles registered over this period and not the totalnumber of live vehicles (the number of write-offs, abandoned and laid up vehicles each year are anunknown).(2) 40 percent of all vehicles registered from 1990 – 2001 were 2 nd hand.(3)Annual increase in vehicle population from 1990 to 2000 is 5,9 percent.Source: Department of Road Traffic3.4.2 Railway SectorGeneral BackgroundMalawi’s rail network is not very extensive with only the southern half of the countryeffectively served by two rail lines. Malawi has a total of 797km kilometers of singletrackpublic railway line within the country’s borders of which 717km is operational.The rail network extends in a north – south direction from near the Mozambique borderin the south through Blantyre up to Salima in the north from where it changes directionto the west and continues through Lilongwe to Mchinji and the Zambian border. TheNacala Corridor line extends from the Indian Ocean port of Nacala (Mozambique) inthe east through the Malawi border town of Nayuchi and links up with the north -south line at Nkaya. There is also a privately owned 25km long spur off the north –south line from Namatunu to Changalume. The operational rail line in Malawi isgenerally in good condition although substantial portions of the track are programmedto be re-ballasted and the track will be resurfaced where required. There is a 77 kmsection of the Nacala Corridor line from Cumba to Entre Lagos in Mozambique that isin poor condition and both sleepers and rail need to be upgraded.32

There is a break in the north – south line just north of Bangula where the line crosses theShire River and the Malawi rail network can therefore not connect to the Tete Corridorthat has recently been rehabilitated.The maintenance facilities and equipment, both for the rail and rolling stock, areextensive, up to date and generally in good condition. There are a total of 19 stationsalong the two rail lines in Malawi. The passenger, freight and control functions havebeen closed at six of these stations and there are plans to close these functions at afurther four stations. All the rail stations in Malawi have rudimentary facilities. Theexisting token control system used for the rail services in Malawi is considered to beobsolete.The Central East African Railways Company Ltd (CEAR) together with CFM-Norte inMozambique runs the railway line commercially between Lilongwe, Blantyre and theport of Nacala. CEAR have extensive rolling stock including 14 mainline locomotives, 5shunting locomotives, over 400 cargo wagons and 24 passenger coaches.Fuel, oils, wheat, fertilizers, salt and other general cargo are imported via the Nacalaline and tobacco, tea, sugar, pigeon peas, groundnuts and general cargo are exportedvia this line. Local traffic includes clinker, coal, fuel, wood, timber, charcoal, cement,tobacco, maize and general cargo. Local traffic makes up the bulk of the goods movedby rail in Malawi. The goods services on the north - south line is considered to beefficient and operates virtually at capacity. The Nacala Corridor line is operating overcapacity at present although the service has a weak link due to the 77km section inMozambique that requires to be upgraded that adds some 4 to 5 hours to the trip. Noneof the major shipping lines call at Nacala. This creates a requirement for trans shippingat the port. The limited numbers of ships that call in at the port of Nacala also restrictsthis service. The rail link between Lilongwe and Mchinji is not well used.CEAR also operates two subsidized passenger and limited goods services to the southand north from Blantyre essentially serving the rural areas. The service to south consistsof three round trips per week, which is considered to be efficient and operates ataround 90 percent of capacity. The service to the north consists of two round trips perweek and is also considered to be efficient, operating at around 90 percent capacity.Neither of these passenger services covers their costs even with a fixed subsidy from theMalawi Government. The passenger waiting times are not excessive for the serviceprovided.The rail track in Malawi has the capacity to carry five times the number of trains thatpresently use the system.A rail safety maintenance plan has been formulated by CEAR together with the RailwaySafety Regulator of Malawi and is presently being implemented by CEAR. Rail33

transport in Malawi is considered to be safe with no major incidents reported sinceCEAR commenced operating the rail network in December 1999.PlanningCEAR are investigating two possibilities of extending the existing active track inMalawi and thereby also extending the existing services provided.The first is the repair of the wash away in the north – south line at the Shire River justnorth of Bangula (km77) so that the system can extend to the Mozambique border in thesouth and possibly linking to the old Beira rail line that was destroyed during theMozambique civil war. The Beira line, however, has to be completely rebuilt and thereis some doubt as to the efficiency of operating two rail lines between Malawi andseparate Indian Ocean ports. It would appear that this project is not economicallyviable.The second is the extension of the east - west link from Mchinji to Chipata in Zambiapredominantly for transporting timber. The grading for 23kms of this 40km link hasalready been completed although this also needs to be repaired in places. Initialinvestigations indicate that there is insufficient demand to economically justify theextension of this line from Mchinji to Chipata in order to provide a rail link from theeastern region of Zambia to the Port of Nacala. As with the above project this projectalso does not seem to be economically viable.In addition to the above CEAR is planning to replace the existing token control systemfor the rail with a VHF radio system.The Malawi Government through Action Plans developed to satisfy the requirements ofthe National Transport Policy, plan to undertake a feasibility study into the use of railtrams for passenger transport in urban areas. The Action Plans also support the spotrehabilitation of the 77km section from Cumba to Entre Lagos, the construction of theMchinji line, the installation of rail communications facilities and the construction offeeder tracks along the Nacala line.Economic PolicyRail was the main mode of transport for Malawi’s foreign trade before the lines to Beiraand Nacala were severely damaged in 1984-85. The Nacala line was reopened in 1989,and Malawi Railways was commercialized in 1994 but remained unprofitable, receivinga government subsidy. In 1999 Malawi Railways was concessioned to the Central EastAfrican Railways Company Limited. Road transport took over Malawi’s foreign tradefrom 1984-85 onwards, and rail has struggled to regain traffic. Rail should be able to bethe lowest-cost transporter provided all modes are treated equally in terms of policy,i.e., no subsidies and full user-cost recovery. This is not the case at present as policy isskewed in favor of road. Most of the problems confronting rail transport are external,34

e.g., the inefficiency of the logistics chain because of the preference of shipping lines toserve Nacala primarily on a feeder basis, the failure of Mozambique to commence theoperating concessions at the port and on the Nacala line, and poor track conditions inMozambique which affect turnaround times. Passenger traffic is being conveyed undera five-year agreement with the government. There is a fixed subsidy, but the service isessentially for social purposes to rural areas, and is unprofitable. Passenger services arecapital-intensive, and are not supported by fares that are the equivalent of third class.The agreement is subject to review after five years.Institutional and Management DevelopmentMalawi Railways (MR) was a government parastatal that was commercialized in 1994with the government as sole owner. In 1999 it was taken over on a 20-year concessionby the Central East African Railways Company Limited. The CEARC has twoshareholders – SDCN (51%) and CFM (49%). The CFM’s share should be 33 percentbecause 16 percent is intended to be set-aside for Malawian shareholders, but none haveyet emerged to take up the offer. SDCN is 16.67 percent owned by each of fourcompanies (the US-based Railroad Development Corporation and companies in theBahamas, in Portugal and in Mozambique), with the remaining 33.33 percent being splitamong six Mozambican shareholder groups. CEARC’s Mozambican company willhave a separate management structure for the port but an integrated structure betweenthe rail and port operations.CEARC took over all assets except track, land and buildings, and is responsible for theoperation and maintenance of the lines. It has to turn them back in 20 years in the samecondition. The CEARC has also been awarded the concession by CFM(N) to run therailway and the Port of Nacala, but the concession has not yet come into effect. Atpresent there are two separate fleets – CEARC and CFM – but these would berationalized and the entire rail operation on the Nacala Corridor would benefit once thecompany is operating the concession in both countries. Capacity problems stem fromshortages of locomotives and container-carrying wagons, but operating problems at theborder have been overcome. The new management has already made significantchanges on the passenger services side with Liwonde becoming the central point forthese services given its location in relation to the passenger routes.Forecast Demands and Future PlanningThe net Ton Kilometers of Goods handled by rail increased at a rate of around 3 percentper annum between 1996 and 1999 with a noticeable 28 percent increase from 1999 to2000. Table 3.9 below refers. CEAR has reported a high demand for container andgood services both within Malawi and along the Nacala Corridor and have estimatedthat they need a further 96 container wagons and 50 covered wagons to satisfy thisdemand. All other rail infrastructure is available and in good condition to accommodatethis forecast demand. It is therefore forecast that the net Ton Kilometers of Goods35

handled by rail will increase at a rate of 10 percent per annum for the short to mediumterm.TABLE 3.9 TOTAL GOODS AND PASSENGERSHANDLED BY RAIL, LAKE AND AIR TRANSPORT IN MALAWI (1995 – 2000)YearNet TonKm(‘000)Rail Lake AirPassengerKilometersNumber ofPassengersNet TonKmPassengerKilometersNumber ofPassengersFreight Handled(Tons)Number of Passengers(‘000)Chileka Lilongwe Chileka Lilongwe(‘000)(‘000)(‘000) (‘000)(‘000) Airport Airport Airport Airport1995 73 21 524 422 4 368 15 577 209 1 302 5 401 105 1937071996 56 26 166 465 1 426 9 644 141 1 168 5 971 117 2029231997 45 17 274 390 2 848 10 125 132 1 068 5 167 125 2115511998 54 20 749 425 4 601 8 601 110 477 2 433 74 1029851999 62 19 106 327 3996 8 128 95 824 4 548 119 1974422000 79 24 789 418 745 7 054 80 678 4 670 104 202747Source: Monthly Statistics Bulletin – March 2001There was a steady 11 percent per annum decline in the total number of passengerstransported by rail in Malawi from 1995 through to 1999 although this trend seems tohave been reversed after CEAR took over the passenger services in December 1999.There was a noticeable 28 percent increase in the number of passengers transported byrail in 2000 compared to 1999. This is considered to be due to the improved efficiency ofthe passenger services provided by CEAR and this turn in the trend is expected tocontinue for 2001, 2002 and 2003 although at a reduced rate of around 10 percent perannum after which demand is expected to level out and reduce in the longer term. Boththe north and south passenger services are presently operating close to capacity and theincreased demand for the next two years will see the services operating over capacity.These services, however, are not financially viable and there is no plan for expansion.Strengths And WeaknessesInfrastructure: The strength of rail transport in Malawi with regard to infrastructure andservices is that the rail network is well connected to two major commercial centers inthe country, to the majority of the producers of export goods in the country and to theclosest Indian Ocean port, Nacala. This rail network is also in reasonably goodcondition and the services offered by CEAR are considered safe and relatively efficient.A further strength is that the rail network is operated on a commercial basis underconcession.36

The weakness of rail transport in Malawi with regard to infrastructure and servicesgenerally is that it is not extensive enough to serve the entire country although atpresent there is insufficient demand to justify any expansion. In addition, the MalawiGovernment does not have funding to implement their future planning for the modeand the topography of the lines is hindering the expansion of the existing goodsservices provided. A further weakness is that there are no economically viableexpansion projects.Planning: From a national, regional and international perspective, rail does not play amajor role in the transportation of passengers in Malawi. The frequency of existingpassenger services is once every two or three days. Whilst these services are running ator close to capacity and there is an expected short-term increase in demand, they are notfinancially viable even with a fixed subsidy and certainly could not justify theirexpansion to daily services for example. CEAR in all likelihood would thus continue torun the limited passenger services required of them in terms of their concession but willnot be able to expand these services due to increased operating losses that will beincurred.Rail does, however, play a significant role in the transportation of goods both nationallyand regionally via the Nacala corridor. There is a high demand for container and othergoods rail services in Malawi. However, CEAR does not have the funding to obtain therolling stock required to accommodate this demand.With regard to the Nacala Corridor, ships do not call regularly at Nacala and the 77kmsection that needs upgrading, both of which reduce the efficiency of this rail service.The strengths of the future planning for rail infrastructure and services in Malawi is thatthe action plans developed to address the requirements of the National Transport Policyare extensive and comprehensive. The weakness of future planning for this mode is thatthe Malawi Government does not have funding to undertake some of the action plans.CEAR are continually planning to improve their services, however, financing is difficultin this environment and there are at present no economically viable projects forexpansion of the existing system.Economic: The strengths of rail transport are that it is the mode best suited to conveybulk traffic such as sugar, maize and fertilizer, and that its rates are generally lowerthan by road. It also has lower social costs in terms of externalities. Against this, rail inMalawi serves only the area from Lilongwe southwards, it is inevitably tied up withinter-modal trans-shipment, and there is no direct link to South Africa. Thus, theNacala Corridor is not necessarily the lowest-cost route for traffic between Malawi andSouth Africa, while Nacala is regarded by shipping lines as a feeder port with few37

direct calls, thus adding to transport costs. Rail transport also suffers from thedisadvantage (common in Southern Africa and other parts of the world) that transportpolicy favors road haulage by failing to recover user costs and to enforce legislationcontrolling traffic. This makes it more difficult for rail transport to reorganize itself andto recover the traffic it lost as a result of the Mozambican civil war.Institutional structure and management capacity: Concessioning of the railway operationhas strengthened the institutional structure and management capacity in this sub-sector.Already the new management has tackled passenger transport services imaginatively.The main institutional and management problems stem from the dependence of railtransport in Malawi on operational efficiency and infrastructural capacity at the port ofNacala and on the CFM line: the railway cannot operate effectively in Malawi unless itscounterpart in Mozambique and the Nacala port are operating efficiently. Problemsshould be eased once the concessionaire is able to commence operating the concessionin Mozambique. A particular weakness of rail transport is that there is no strongpolitical lobby supporting it.Rail Constraints: Since the end of the Mozambican civil war, the Malawi Governmenthas revived the importance attached to the movement of freight through rail transportwith the Nacala Corridor being the focus of attention. The thinking behind this has beenthat the corridor holds numerous advantages over other modes of freight transportcurrently available in the country. Though this may be the case, there are a number ofbottlenecks or problems associated with the use of rail transport where Malawi isconcerned.According to the country’s sole rail operator, these are both internal and external toMalawi. All in all, the constraints faced include:• Infrastructure• Track maintenance• Rail administration• Competition with road transport• Government policy• Concessionary issues1. On infrastructure, the general consensus was that this is very old, worn out andinadequate. Examples cited were worn out tires that require replacement; agedlocomotives whose capacity has greatly deteriorated and are surviving throughcannibalizing from other worse off locomotives; maintenance workshops are operatingbelow par with equipment being scraped off to feed other workshops deemedsalvageable. All this leads to high maintenance costs and inadequacy in meetinghaulage traffic due to a decrease in carrying capacity. The situation is made worse whenone considers the fact that the greater part of the rail lines are in Mozambique where38

these same problems are worse than in Malawi. The facilities at Nacala are not asadequate as CEAR would want them to be, leading to unnecessary delays of cargowhich has a direct effect on the rest of the line even the outbound. This negates all ofCEAR efforts at client satisfaction and cost savings.2. A second constraint though greatly related to the first was said to be trackmaintenance. Some of the track is poor in some areas especially Mozambique. This isgetting harder to replace due to the high expensive costs of the rail tracks at currentmarket prices and also current GoM policy which is skewing the markets in favor ofother modes of transport. In the past, this was not there as the Railway Company usedto get aid and GoM was responsible for all transport infrastructures without bias. Thispoor track is subject to wash-a-ways and siltation on the lines in the rainy season. Thiscould be easily avoided if the track was replaced; this also plays a role wherederailments are concerned. The other side of the border also takes too long to effectrepairs (a function of poor communication and elements of bureaucratic red tape).3. Rail administration is poor. CFM operates the railway as well as Nacala Port andgive priority to Mozambican requirements. This is highly evident when handlingfreight deemed urgent by their authorities and when available facilities cannot supportall the cargo. Malawian cargo is sidelined causing delays and increased demurragecosts. CFM still suffers from the previous socialist government’s management systems,which make communication and cooperation cumbersome and slow.4. Tariffs charged by CFM are high and are just imposed on CEAR without reasonablyconsidering the position of their counterpart. There is no meaningful dialogue withCEAR to this effect. This situation is compounded by the fact that most of the track lieswithin Mozambique:• Nacala-Interagos 615/618 km• Nayuchi-Blantyre 189 km• Nayuchi-Lilongwe 389 kmAccording to CEAR, a higher ratio of the rate goes to the country from which the freightis moving and this favors CFM because Malawi imports more than it exports at themoment.5. Competition with road transport impacts on the performance of CEAR and railtransport in general in Malawi. This is exacerbated by the fact that road transport isgiven unfair advantages which distort the market in favor of haulers. High-levelofficials in Government who make policy decisions concerning transport have directinterests in road haulage.In the freight industry, road transport has an edge over rail because:39

• Most of the disadvantages of rail have to do with the capacity to handle cargo andthe time it takes to deliver this cargo. The freight forwarding business is verycompetitive and driven by time. The railway has several operators who controldifferent segments which increase inefficiency and which leads to delays causingcargo to miss sailing times. Demurrage charges are billed on to the importingcompany (This was one of the minor reasons cited in the Petroleum ImportersLimited [PIL] decision to cut share of oil haulage given to the rail company).• Currently, the rail service only has one operable line at its disposal terminating atNacala. Due to various reasons this route has limitations in handling cargo whichmakes the shipping lines schedule their timetable in such a way that they only call atthe port when there is a sizeable amount of cargo to pick up i.e. once a week. Thisinconveniences freight forwarders and limits the options they would exercise if theywere dealing with a port with big freight volumes and different lines calling.6. Government Policy is a severe bottleneck. It no longer finances any kind ofinfrastructure, which pushes all the costs onto the rail company while at the same timeGoM funds and maintains infrastructure used by their competitors (roads). GoM hasnot made any investments in the rail industry recently, which would have improvedperformance.GoM also does not help or facilitate negotiations with CFM or the Mozambicangovernment, which would improve the level of cooperation and would speed up somepaperwork.7. Concessionary issues. The rail operators in Mozambique have still not beenconcessioned-off as was the original agreement between the two governments.Decisions are therefore made on political expediency rather than for commercialreasons. The large amount of bureaucracy involved in Mozambique slows down thecorridor’s operation. This bureaucracy leads to delays in the maintenance of the line. Onthe Malawian side, the privatization was done without the necessary rehabilitation ofthe infrastructure, which would have given CEAR an ability to be more competitive. Ifthe Beira line were operational, it would have provided alternative routes for CEAR toutilize.40

TABLE 3.10 ROLLING STOCKOPERATED BY THE CENTRAL EAST AFRICAN RAILWAYS COMPANY LTD1. Mainline MLW Bombardier Locomotives 132. Shunting Locomotives 53. Commercial Wagons 407Covered Wagons 23Low Sided Wagons 86Tank Cars 64Container Flat Wagons 61High Sided Wagons 62Brake Vans 8Cattle Trucks 34. Passenger Coaches 24Standard Coaches 17Sleeper Coach 1Passenger Vans 4Saloon 1Executive Coach 1TABLE 3.11 EXPORTS, IMPORTS AND LOCAL TRAFFIC IN TONS MOVED IN FEBRUARY,MARCH AND APRIL 2000 BY CEAR COMPARED TO THE SAME MONTHS IN 1999Feb2000Feb1999March2000March1999April2000April1999Imports 2409 2278 3706 4753 2410 2464Exports 5429 7689 7834 5222 9582 5096Local 17627 8991 18007 12652 19593 1170725465 18958 29547 22627 31585 19267Source: Central East African Railways Co. Ltd.3.4.3 Lake TransportGeneral BackgroundLake Malawi is the third largest lake in Africa and is 568 km long and between 16 kmand 80 km wide with a total area of around 24,000 km². The lake extends from the northof Malawi along almost two-thirds of the length of the eastern side of the country and isthus well placed to serve as a north – south transport link. There are 10 majoranchorages and 4 ports along the lake in Malawi, two major anchorages in Mozambiqueand a port in Tanzania that are commercially operational. Monkey Bay is theheadquarters for all Malawian shipping activity on Lake Malawi and Nkhata Bay is thebusiest port on the lake in terms of passenger and goods movement.41

The facilities at most of the ports consist of goods sheds, passenger waiting rooms,mobile cranes, forklift trucks, fitting shops and finger jetties. There is also a floating drydock at Monkey Bay and a gantry crane at Chilumba. These facilities are generally ingood condition although the finger and pontoon jetties at some of the ports are in verypoor condition and need upgrading as do the passenger facilities at some of the ports.The navigational aids along the lake are generally good although they are not beingmaintained and their condition is thus deteriorating rapidly due to this.There are a total of 15 registered large commercial vessels on Lake Malawi and over3,000 registered small-motorized vessels. Most of the commercial vessels are in goodcondition with only two that are not seaworthy.The commercial activities on Lake Malawi including the provision of ship services andport management have been privatized. Glen Waterways will take over full operationalcontrol before the end of 2002 from Malawi Lake Services.At present, there are only two passenger and goods services being offered by MalawiLake Services. The first is a long range round trip service from Monkey Bay on the Illalain the south through to Chilumba in the north that crosses to two ports in Mozambiqueand one port in Tanzania. This service is considered to be cost effective, however, it iscircuitous and thus time consuming and inefficient in comparison to other modes. Theservice runs at between 50 percent and 75 percent of capacity mainly because theincorrect vessel is being used for this type of service. The second is a shorter weeklypassenger and goods service operating three routes; from Nkhata Bay to Cobue(Mozambique), from Nkhata Bay to Charo and from Nkhata Bay to Mbamba Bay inTanzania. This service is slow but efficient and runs below capacity.An average of 6,500 passengers and 1,200 tons of goods per month are transportedcommercially across the lake.The transport of freight on Lake Malawi is still in its infancy on the lake. The mainreason for this is that shipment and handling times are excessive in comparison to othermodes. Multi-handling of goods also increases losses, damage and overall costs. Fuelused to be transported by lake as part of the Northern Corridor routing. This ceasedbecause of competition from road tankers.Malawi has a Marine Police Service, which is ill equipped and unable to be effectivemarine law enforcers.PlanningPrior to the privatization of the shipping and port services on Lake Malawi, MalawiLake Services and the Department of Marine Services had plans to:42

- Upgrade seven of the existing anchorages to the ports by installing jetties andadditional passenger and goods facilities; and- To purchase two new smaller passenger and cargo vessels of around 200 passengercapacity to reduce the existing long range trip to two shorter distance trips, thusincreasing frequency, reducing delays and improving efficiency.There were also plans to develop a new port at Ngowo in Mozambique although thestatus of this project is unclear.Glen Waterways have already initiated an investigation into using the ShireRiver/Zambezi River system for river transport including opening up the link betweenBeira and Blantyre using rail for the last section from Chiromo to Blantyre.A port to cater for the transport of ethanol, sugar and molasses from Dwangwa around100km north of Nkhotakota has been identified. This is still in drafting stage and isbeing reviewed both by MLS and Illovo Sugar Corporation.There are a few private sector plans to introduce tourism services on the lake and alarge catamaran tourist service has recently been launched on the lake operating fromCape Maclear.The Malawi Government has a National Transport Policy for Marine Transport that hasspecific objectives and strategies with regard to inland shipping, international shippingand multi-modal transport. Action Plans have been developed to satisfy therequirements of the National Transport Policy and these action plans include thefollowing with respect to maritime transport infrastructure and services:• Promote the involvement of the private sector in the operation of lake transportservices.• Improve navigational aids.• Develop appropriate port infrastructure at Likoma Island, Kambwe, Makanjila,Dwangwa, Nkhotakota, Nkhata Bay and rehabilitate Chipoka and Chilumba.• Promote and facilitate multi-modal transport.Economic PolicyGovernment policy is to allow anyone to operate on the lake. Lake transport wascommercialized in 1994 with the establishment of Malawi Lake Services Ltd., whollyowned by the government. However, the company continued to run at a loss, receivinga government subsidy of approximately Kw25 million per annum. The service has nowbeen concessioned to a private operator, Glens Waterways Limited. Ports are to beconcessioned separately to the same company. Government policy is to strengthen theadministration of marine services, to increase investment in infrastructure, and to43

develop links across the lake with Mozambique and Tanzania. Lake services areregarded as important for remote rural areas. Some rural areas’ only transport corridorsare via the lake. Without an improved service, there is virtually no opportunity forthese communities to develop or trade. The Nacala Development Corridor Secretariatbelieves that a cross-lake service from Meponda in Mozambique could be a viablealternative for northern Malawi to using the Northern Corridor or the railway inMalawi. Lake traffic has fallen since a parallel road to the north was built. Thecompetitiveness of lake transport is compromised by the unsuitability of much of thefleet. Investment is also required in improving infrastructure, including jetties, at someof the ports. Lake transport is essentially part of a multi-modal system involving transshipmentat either end to road or rail, and trans-shipment costs mean that it wouldalways struggle to be competitive. Nevertheless, as in the case of rail, lake transportcould be more competitive with road provided transport policy were revised to provideequal operating conditions to all modes. There is potential for growth of cross-lakelinks to Mozambique and Tanzania (this has tremendous potential in terms of trade),and in the passenger field to cater for up market tourists.River transport provided a barge service all the way to Chinde on the Mozambicancoast before being stopped by the Mozambican civil war. The investment required toreinstate this service would be significant, but it could divert some Beira traffic from theroad.Institutional, Management and Socio-economic DevelopmentLake services were under Malawi Railways until 1994 when rail and lake transportwere split. Lake and inland waterway transport fall under the Department of MarineServices in the ministry. The department is in charge of the safety and regulation ofshipping, training, investment, project implementation, and the ownership andoperation of ports, equipment, shipyard and vessels. Glens Waterways Limitedassumed control of ship and port operations from 1 December 2001, so that thedepartment will remain as the regulator, ensuring the observation of safety regulations,etc. The concession is for 20 years with an option of another 20 years, and includes thetakeover of equipment.The Inland Waters Shipping Act covers enforcement. Unfortunately, there is a shortageof vessels for this purpose so that the Marine Police have difficulty in enforcing therules. There is considerable illegal commercial shipping on the lake especially as boatsfrom Tanzania call at unofficial stops. Private small operators vary from outboardmotors to canoes. Only motorized boats are registered, and these number over 3,000.Reliable lake services will require the enforcement of safety standards and otherregulations. There is a huge informal trade between the northern parts of Malawi andTanzania.44

PlanningThe volume of freight transported over the lake decreased considerably per annumfrom 1995 to 1999 and from 1999 to 2000. Similarly, the number of passengerstransported over the lake has decreased by more than 60 percent from 1995 to 2000 . Themain reason for this continued reduction is the upgrading of the road network parallelto the lake, coupled with the development of the minibus industry and the lack of lawenforcement on the roads. All of these factors have made road transport more time andcost effective for both passengers and freight compared to transport over the lake. Thistrend in both passenger and freight transport is unlikely to change in the foreseeablefuture or certainly until the impact of the privatization of the services and portmanagement have had an impact on the existing negative aspects of lake transport.Lake services will continue facing a decreasing market over the next two years. It ishoped that as MLS becomes more efficient this trend will reverse.Strengths and WeaknessesInfrastructure: The strength of lake transport in Malawi with regard to infrastructureand services is that the lake is ideally aligned in a north – south direction along almosttwo-thirds of the length of Malawi. The lake is a unique asset for Malawi as no othersouthern African country has a similar tourist attraction. Further strengths include theexisting ports and anchorages and available infrastructure that is presently underutilized.The Malawian Government has privatized lake transport and portmanagement and has also developed extensive policies and strategies to strengthen andimprove lake services, improve safety and promote multi-modal transport using laketransport as a link. The policies and strategies also promote co-operation with the lakeneighbors, Mozambique and Tanzania.The weakness of lake transport in Malawi with regard to infrastructure and services isthat the lake is not located on direct regional or international transport routes. The lakeis far from large commercial/consumption centers in Malawi and the majority ofproduction areas that require bulk regional and international transport. The incorrectvessels are being used for the long and short-range passenger and goods servicesresulting in time consuming and circuitous trips that cannot compete with roadtransport (this is being addressed by the new management of MLS and a strategy to usethe right vessels for the right business is being undertaken). The cargo handling timesand transshipment costs further reduce the efficiency and cost effectiveness of laketransport for freight. The lack of road law enforcement in terms of minibus passengernumbers and heavy vehicle overloading results in road transport becoming even morecost effective compared to lake transport.A further weakness in this mode is the rapid change in containerization technology thatrenders equipment obsolete after very short periods of time. The existing demand for45

container services cannot economically justify the replacement of this equipment on aregular basis.TABLE 3.12 REGISTER OF LARGE VESSELS ON LAKE MALAWIName of VesselType of VesselMV KatunduContainer VesselMV UfuluProduct TankerMV MtenderePassenger & Cargo VesselMV IlalaPassenger & Cargo VesselMV KarongaBulk CargoMT ViphyaTug and PontoonMV NkwaziCargoMV Chauncy Maples Laid UpML NcheniLaunchMV SunbirdTourismRV TimbaResearch- Barges x 2- Dredgers x 2Note: In addition to the above there are over 3000 registered small-motorized vessels that operate on thelake.Source: Department of Marine ServicesThe lake is not marketed enough as a regional or international tourist destination. Theuse of the lake as a tourist attraction is, however, impacted by the excessive costs ofgetting to the lake by road or air in comparison to comparative tourist attractions inother countries.The lack of equipment for the Marine Police Services to enforce maritime laws,particularly illegal commercial shipping to and from Tanzania is a further weakness.The reduction in general funding from central government for lake transportmaintenance and operation over the last few years coupled with the lack of fundsallocated to the many urgent infrastructural projects for lake transport indicate limitedpolitical support for lake transport in Malawi.Planning: The strengths of the future planning are that there are extensive strategies thathave been investigated and if implemented could result in cost effective and efficientlake transport service in Malawi. With the privatization of the lake services and portmanagement on Lake Malawi, all economically viable future plans are likely to beinvestigated, funding pursued and projects implemented.The weakness of the future planning for lake transport is that no action plans have beendeveloped by the Department of Transport and Public Works to implement the46

strategies contained in the National Transport Policy document and no funding fromthe Malawian Government has been made available to undertake feasibility studies ofpossible economically viable expansions to the existing services and infrastructure.There is limited political support for the future planning of lake transport. The lack ofany formal planning with regard to tourism on Lake Malawi is also a weakness.TABLE 3.13 MALAWI LAKE DISTANCES BETWEEN PORTS AND ANCHORAGESMonkey BayChilindaMakanjiraChipokaNkhotakotaLikomaChizumuluMonkey Bay - 41 50 50 219 315 315 400 356 372 410 426 437 463 494Chilinda 41 - 41 65 122 193 193 395 323 296 316 331 342 366 402Makanjira 50 41 - 50 113 140 140 303 296 280 281 295 306 328 369Chipoka 50 65 50 - 161 238 238 336 298 314 352 369 380 406 436Nkhotakota 219 122 113 161 - 116 116 212 158 174 212 229 240 266 296Likoma 315 193 140 238 116 - 21 117 78 115 129 135 139 220 251Chizumulu 315 193 140 238 116 21 - 98 61 78 100 111 127 201 232Mbamba Bay 400 395 303 336 212 117 98 - 69 53 124 130 141 50 129Nkhata Bay 356 323 296 298 158 78 61 69 - 17 45 61 76 108 138Mangwina 372 296 280 314 174 115 78 53 17 - 39 43 60 92 122Usisya 410 316 281 352 212 129 100 124 45 39 - 15 32 53 87Ruarwe 426 331 295 369 229 135 111 130 61 43 15 - 15 47 68Charo 437 342 306 380 240 139 127 141 76 60 32 15 - 24 55Mlowe 463 366 328 406 266 220 201 50 108 92 53 47 24 - 31Chilumba 494 402 369 436 296 251 232 129 138 122 87 68 55 31 -Mbamba BayNkhata BayMangwinaUsisyaRuarweCharoMloweChilimbaEconomic Policy: Lake transport is provided by nature, and the only investmentsrequired are in port infrastructure and vessels. Lake services if properly run shouldrelieve roads of some heavy vehicle traffic reducing road maintenance costs. Socialcosts are minimal as there are few external diseconomies.The Weaknesses are:• Inadequate investment in infrastructure• The inappropriate vessels that have been purchased, and transshipment costs, whichhave to be incurred as a result of the multi-modal nature of lake transport.• Policy bias in favor of road transport is an additional problem. River transportshould be able to provide a cheap mode, but has also suffered from the Mozambicancivil war with lack of maintenance and the loss of barges. However, if this modecould be re-established, it would offer cheaper transport and also lower social costs.47

Note: As in the case of rail, there is no particular political lobby to support laketransport.TABLE 3.14 PASSENGERS CARRIED BY M.V. ILALAON SELECTED JOURNEYS DURING 2001Date Route Total Number of Passengersper TripPeak Occupancyper Trip08/03 Out 581 18215/03 Back 617 18527/04 Out 581 18503/05 Back 773 26704/05 Out 803 23210/05 Back 920 31911/05 Out 649 16517/05 Back 652 19818/05 Out 560 14824/05 Back 595 157- Average 673 -21/09 Out 345 9326/09 Back 401 11228/09 Out 578 14203/10 Back 620 162- Average 486 -Source: Malawi Lake ServicesNotes : 1. Average Occupancy Out = 182 passengers2. Average Occupancy Back= 225 passengers3. Busiest : Monkey Bay, Likoma, Nkhata Bay3.4.4 Airports and Air TransportGeneral BackgroundCivil aviation in Malawi is a comparatively small industry, however, air transport isboth strategically important as Malawi is a landlocked country and economicallysensitive due to trade globalization and the adoption of an open skies policies inCOMESA.During the past 10 to 20 years, the Malawian government has invested heavily in civilaviation infrastructure, equipment and aircraft in order to be able to provideinternational standard air travel over Malawian skies.48

Malawi has four international airports; two major airports at Lilongwe and Chileka(Blantyre) and two minor airports at Mzuzu and Karongo. In addition to theseinternational airports there are a further 19 registered airfields in Malawi of which 4 areprivately owned. There are also at least 10 known unregistered airfields throughoutMalawi.All the international airports have customs, immigration and airport police securityservices and facilities. Lilongwe and Chileka airports also have health, flight catering,ground handling and aviation fuel services and facilities.Lilongwe has the longest runway and the most modern terminal buildings of the fourinternational airports although the communication and navigation facilities at Lilongweneed to be upgraded and the buildings need a facelift. The runway at the Lilongweairport has developed cracks and the Department of Civil Aviation is in the process ofrepairing these. All of the airport facilities at Chileka airport need to be upgraded andmodernized. The runway at Chileka is not able to accommodate aircraft larger thanBoeing 737s. The facilities at the other two international airports are rudimentary,however, they are considered acceptable for the number of flights that are catered for atthese airports.There are no facilities of any significance at any of the smaller airfields that arepredominantly maintained for tourism and national security.There are a total of 25 registered aircraft in Malawi of which 15 are privately owned and10 are owned by the Malawi Government or Air Malawi. Of these 25 aircraft, only 12have valid certificates of airworthiness as of 1 July 2001. The number of registeredaircraft in Malawi has reduced from 29 in 1999 to 25 in 2001.A total of six national airlines operate 37 scheduled international flights per week fromLilongwe and Chileka international airports; Air Malawi, Air Zimbabwe, South AfricanAirways, Ethiopian Airlines, Kenya Airways and British Airways. These airlines serve 6regional destinations outside Malawi and one inter-continental destination.Air Malawi also operates 60 scheduled domestic flights per week between Lilongwe,Blantyre, Mzuzu, Karongo and Makokola.Chileka airport handled 678 tons of freight during 2000, which is down by nearly 50percent compared to 1995. Lilongwe airport handled 4,670 tons of freight during 2000,which is a reduction of 14 percent from 1995. Recent indications are that there will be afurther significant drop in airfreight to and from Malawi in 2001 at both airports. Airfreight to and from Malawi is expensive in world terms and whilst the air freightservices are considered to be relatively efficient, additional handling equipment on the49

ground at the two international airports coupled with an improved customs procedurewill significantly improve efficiency which in turn could reduce costs.The number of passengers passing through Chileka airport has been fairly static since1995 at between 100,000 and 120,000 with a downward trend developing since 1997.Similarly, the number of passengers passing through Lilongwe airport has been fairlystatic since 1995 at between 200,000 and 225,000 with a slight downward trenddeveloping since 1997.Regional and international air travel to, from and within Malawi is expensive in worldterms. Generally, the aviation facilities in Malawi are operating well below capacity.PlanningMalawi needs to ensure that international standards in aviation are maintained in orderto be able to protect existing investment in aviation infrastructure, provide a safe airtravel environment and encourage private sector involvement in civil aviation. As such,the Malawi Government has a National Transport Policy for Civil Aviation that hasspecific objectives and strategies with regard to aviation infrastructure, safe, efficientand cost effective air travel and compliance with international standards and policies.Action Plans have been developed to satisfy the requirements of the National TransportPolicy and these action plans include the following with respect to civil aviationinfrastructure and services:• Provide and improve aviation infrastructure at Mangochi, Likoma, Mzuzu,Lilongwe and Chileka.• Improve navigation aids and communication facilities.• Privatize the national airline and economically feasible airports.A feasibility study into the restructuring of the civil aviation industry in Malawi hasrecently been completed. Commercialization of the civil aviation sector is thus underconsideration, with the privatization of Air Malawi being well underway. Privatizationof Chileka airport is also presently under consideration with a study commissioned bythe Malawi Development Corporation having recently been completed. No decision hasbeen made in this regard. Should this privatization proceed and be successful, there islikely to be an improvement in the maintenance and replacement in infrastructure andequipment at this airport.There is a need for an airport near the lake at Mangochi to serve the tourist trade. Thiswas planned in the mid 1980’s but to date no further work has been undertaken.Air Malawi is investigating operations to Maputo in Mozambique.50

Future projects of the Department of Civil Aviation include the construction of newairports at Mzuzu and the one at Mangochi and the upgrading of the existing airfield atLikoma.EconomicsGovernment policy is to commercialize the air transport sector. Air Malawi has beencommercialized but is loss making and is negotiating with a strategic partner.Although Malawi has signed the Yamoussoukro Declaration on liberalization of theaviation industry, and has agreed to the COMESA open skies policy, government policyhas been to support the national flag carrier for political reasons. Malawi has beenaffected by changes in the economics of the international airline industry, particularlyby the tendency of international airlines to operate in regional hub airports withregional carriers then serving outlining airports. The number of airlines serving Malawihas fallen, and passenger traffic has decreased. The low levels of traffic mean thatdomestic services are largely on a charter basis, and that there have been no takers forthe privatization of the Lilongwe and Blantyre airports. Air cargo traffic has alsodeclined, and the weekly freighter service to and from London has ceased to operate,giving way to belly cargo with the Johannesburg route predominating.Institutional ManagementThe Department of Civil Aviation regulates aviation activities and the operation ofairports, and reports to the government. It also provides the infrastructure, includingairport navigation equipment, and controls the licensing of private aircraft, pilots andengineers. Relevant legislation for this sector consists of the Aviation Act of 1970, theHijacking Act of 1972, and the Carriage by Air Act. Lilongwe International Airport isjointly run by the department (responsible for the runway, navigational facilities, airtraffic and technical services) and the Airport Developments Company Limited (agovernment-owned company) responsible for the terminal, associated buildings andthe estate. The department has a revenue-collecting function, receiving landing andnavigation fees as well as passenger service charges. Since 1997, the department hasbeen allowed to retain 80 percent of its collections. A study has just been completed onan autonomous Aviation Authority to replace the present civil service setup. Thiswould entail a merger of the department and ADL, i.e. a merger between a civil servicedepartment and a commercialized enterprise, with the former predominating.However, unless the ethos of the business enterprise could predominate, this is unlikelyto be a successful step. The better model would be an Airports Authority and anindependent Civil Aviation Authority as in South Africa and Kenya. In terms of such amodel, the ADL should receive (or at least share) the revenue from passenger servicecharges. At present, its income is restricted to rental from tenants at LilongweInternational Airport. This is insufficient to maintain, let alone upgrade, the terminalbuilding, which is now 20 years old and in need of modernization. With access topassenger service charges, ADL could run all the airports in the country.51

PlanningAir transport activity in Malawi is and has been relatively low since 1990 with no realincrease in any sectors of the industry Commercial aircraft movement has increased inthe last few years but this is mainly due to the use of smaller aircraft. The overallaviation indicators have fallen significantly over the last 10 years and the events on 11September 2001 are expected to have an even further adverse impact on the aviationindustry in Malawi.The Feasibility Study for the Restructuring of Civil Aviation in Malawi adopted amedium growth scenario for civil aviation traffic forecasts in Malawi. This scenariorecommended average annual growth rates at the Lilongwe and Chileka airports ofbetween 1.5 percent per annum for general aviation aircraft movements to 4.2 percentper annum in international passenger movements at Lilongwe airport.The Airports Development Company in their forecasting also expect growth inpassenger volumes of between 1 percent and 5 percent in the next five years andgrowth in freight volumes of between 1 percent and 4 percent over the same period.Both the above forecasts are considered to be optimistic in the light of 2001 indicatorsand the events of 11 September 2001. The demand for both passenger and freighttransport is thus expected to reduce by between 2 percent and 4 percent per annum forthe short term before increases of between 1 percent and 3 percent are forecast.There are no planned developments in any of the major industries that use air transportto suggest an increase in aviation activity. Existing infrastructure and services will thuseasily be able to accommodate the forecast demand.The future efficiency of air transport is critical to the development of the touristindustry and the growth of the private sector.Strengths and WeaknessesInfrastructure services: The strength of civil aviation in Malawi with regard toinfrastructure and services is that the government has invested heavily in air transportinfrastructure, equipment and aircraft in the last 20 years and has thus been able toprovide international standard air travel over Malawian skies during this period.The air services over Malawi skies are at present efficient, reliable and still ofinternational standard. The existing air transport infrastructure in Malawi is underutilizedand will be able to accommodate any significant increase in demand over thenext 10 years.52

The major weakness of the civil aviation industry in Malawi is the rapid change innavigation, communication and apron technology that renders equipment obsolete on aregular basis. The reducing demand in passenger and freight air services cannoteconomically justify the replacement of this equipment on a regular basis.Another weakness is the lack of maintenance of the existing infrastructure andequipment over the years, which will eventually affect the safety, efficiency andreliability of civil aviation in Malawi.Planning: The strength of civil aviation planning in Malawi is the National TransportPolicy on Civil Aviation, which has identified all the issues pertaining to infrastructure,equipment and aircraft for air transport in Malawi and has developed objectives andstrategies to address these issues.A further strength is that the Department of Civil Aviation has identified the need foran airport near Lake Malawi at Mangochi to serve the tourist trade. Tourism is probablythe only industry that will increase demand for air travel in Malawi in the foreseeablefuture.The weakness of the future planning for civil aviation is that no action plans have beendeveloped by the Department of Transport and Public Works to implement thestrategies contained in the National Transport Policy document.Economic policy: Air transport is the main mode for international business andgovernment travel. The two international airports have adequate capacity to handledemand, which in fact has been declining. Passenger and airfreight flight schedulesand services have been cut as a consequence, and more use is now made of regional hubairports for international flight links. Low levels of demand and high costs ensure thatair transport is not a major domestic mode, but it could become more important ifsmaller airfields around the lake, national parks and game reserves were upgraded inorder to develop the tourist industry. The growth of the charter air service industry isconstrained by high interest rates and high duties on aircraft.Institutional management: Although there have been steps in the right direction withregard to the reform of the air transport sector, they have not gone far enough. TheDirectorate of Civil Aviation remains part of the civil service, but there would beefficiency gains if it were commercialized as an independent Civil Aviation Authorityalong the lines of the Kenyan and South African models. The present civil serviceprocedures with regard to salaries and staffing matters make it difficult to recruit someof the skilled people required. The establishment of Airports Development Limited hasimproved the management of the Lilongwe International Airport, but the managementof Blantyre airport remains unchanged. There may be considerable efficiency gains ifADL’s mandate were to be extended to all airports, as has been the case in the South53

African model. The funding procedures for ADL are inadequate for the purposes ofupgrading the airports, and this is a weakness that needs to be rectified.TABLE 3.15 REGISTRATION OF AIRCRAFTS IN MALAWI AS OF 31 JULY 2001Aircraft TypeNo. onRegisterOwnershipATR 42 – 320 1 Air MalawiAYRES S2RT THRUSH 1 Makandi AviationBEECH A36 BONANZA 1 SR Nicholas LtdBEECH 58 BARON 1 Illovo SugarBEECH 300 1 Stancom AviationBOEING 737-33A 1 Air MalawiBRITTEN NORMAN ISLANDER 2T 3 Malawi PoliceCESSNA 150 1 Malawi PoliceCESSNA 172M 1 Malawi PoliceCESSNA 182F 1 Makandi AviationCESSNA 182R 1 Agritec LtdCESSNA TU 206B 1 Leopard AirCESSNA 208 CARAVAN 1 Air MalawiCESSNA CITATION 550 1 Limbe Leaf TobaccoECUREUIL AS 350 LI 1 Malawi PolicePARTENAVIA P68-TC 1 Lusitania LtdPIPER J3C CUB 1 AJ Rix and P HuegliPIPER PA 18-150 1 Dept. of WildlifePIPER PA 28-140 2 Robin Air Limited /Luchenza FlyingPIPER PA 28-180 1 Luchenza FlyingPIPER PA 28-235 1 Vale DevelopmentTOTAL NO. OF REGISTERED25 -AIRCRAFTSSource: Department of Civil Aviation54

TABLE 3.16 PASSENGER AND FREIGHT HANDLEDAT LILONGWE AND CHILEKA INTERNATIONAL AIRPORTSLilongwe International AirportChileka International AirportYear Pass Freight Mail Pass Freight Mail1990 257,287 6,750 351 76,285 1,144 3341991 300,629 9,226 410 77,840 1,182 601992 265,721 8,611 374 85,759 1,303 571993 254,821 6,683 442 95,075 1,328 1061994 252,000 7,788 353 118,000 1,843 891995 210,196 5,164 352 104,968 1,299 291996 204,803 5,611 271 116,282 1,168 211997 212,038 4,543 248 126,637 1,052 221998 223,038 4,139 314 120,730 1,825 251999 199,364 4,953 287 119,355 654 742000 208,248 4,703 270 103,064 679 40Source: Department of Civil Aviation55

TABLE 3.17 TRAFFIC AT OTHER AIRPORTS AND MINOR AERODROMES, 1999AerodromeAircraft MovementPassengersCom Pvt Military Total On Off TotalKaronga 330 54 36 420 1,098 1,027 2,125Mzuzu 1384 58 176 1,618 3,951 3,964 7,915Lilongwe Old - - 318 318 912 1,007 1,919Zomba 2 2 201 205 715 594 1,309Kasungu 1 2 1 4 19 19 38Mtakataka - - 5 5 15 15 30Mangochi - - 2 2 - - -Monkey Bay 1 - - 1 - 4 4Dwangwa 29 61 - 90 209 203 412Sucoma 26 17 - 43 112 120 232Salima 14 2 23 39 98 111 209Makhanga 17 1 - 18 39 29 68Likoma 13 - 17 30 157 176 333Chitipa 2 - 2 4 12 17 29Nkhotakota - - 1 1 - 3 3Nsanje - - 3 3 12 14 26Makande - - - - - - -Chelinda 69 4 - 73 230 242 472Lifupa 1 - - 1 - - -Satemwa - - - - - - -Conforzi 17 3 - 20 3 14 17Club Makokola 174 53 2 229 786 658 1,444Liwonde - - - - - - -Ntchisi - - 4 4 10 14 24Bangula 2 - - 2 5 - 5Thunga 1 - - 1 3 3 6Mzimba - - 1 1 6 6 12TOTAL 369 145 580 1,094 3,343 3,343 6,592Source: Department of Civil Aviation, Annual Report of Statistics 199956

TABLE 3.18 FORECAST AIR TRAFFIC AT LILONGWE AIRPORTAIRCRAFT MOVEMENTSScheduled2000 2001 2002 2003 2004 2005 2006International 2480 2505 2555 2606 2684 2765 2876Domestic 3507 3542 3612 3684 3795 3909 4065OtherInternational 1810 1828 1865 1902 1959 2018 2099Domestic 2375 2398 2446 2495 2570 2647 2753PASSENGER VOLUMESScheduledInternational Arriving 56253 56815 58519 60275 62686 65820 69111International Departing 60651 61258 63096 64989 67589 70968 74516Domestic Arriving 28115 28396 29248 30125 31330 32896 31541Domestic Departing 23244 23476 24180 24905 25901 21196 28556OtherInternational Arriving 2064 2085 2148 2212 2300 2415 2536International Departing 2167 2189 2255 2323 2416 2537 2664Domestic Arriving 1508 1523 1569 1616 1681 1765 1853Domestic Departing 1429 1443 1486 1531 1592 1672 1756Transit 27187 27459 28283 29131 30296 31811 33401FREIGHT VOLUMESInternational Inwards 3058.7 3089.3 3151 3214 3310 3442 3580Outwards 707.0 714.1 728.4 742.9 765.2 795.8 827.6Domestic FreightInwards 109.8 110.9 113.1 115.3 119.9 124.7 129.7Outwards 252.0 254.5 259.6 264.8 275.4 286.4 297.8MAILInternationalInwards 218.9 221.1 225.5 230 236.9 246.4 256.3Outwards 32.5 32.8 33.5 34.2 35.2 36.6 38.1DomesticInwards 8.3 8.4 8.6 8.8 9.1 9.5 9.9Outwards 1.0 2 2.1 2.2 2.3 2.4 2.5CAPACITY LEVELSPassenger Terminal(pass/hour)65 66 68 70.4 72.8 77 81Freight Terminal (tones/day) 9 10 11.5 12.5 14 15 16Source: Airports Development Company57

TABLE 3.19 MEDIUM GROWTH SCENARIO OF AIRPORT ACTIVITY FROM THE FEASIBILITYSTUDY FOR THE RESTRUCTURING OF CIVIL AVIATION IN MALAWIAverageAirport Activity 2000 2010 AnnualGrowthLilongwe International passengers 133,200 201,100 4.2%Domestic passengers 55,100 74,700 2.9%International freight (t) 3,320 4,580 3.3%Domestic freight (t) 410 530 2.6%International aircraft movements 2,720 4,370 4.8%Domestic aircraft movements 4,850 6,790 3.4%General aviation aircraft movement 1,700 1,970 1.5%Blantyre International passengers 55,300 79,500 3.7%Domestic passengers 47,200 63,100 2.9%International freight (t) 360 510 3.5%Domestic freight (t) 420 540 2.5%International aircraft movements 860 1,270 3.6%Domestic aircraft movements 4,080 5,730 3.5%General aviation aircraft movement 3,500 4,060 1.5%Mzuzu Domestic passengers 7,100 9,030 2.4%Domestic freight (t) 45 56 2.2%Domestic aircraft movements 1,190 1,440 1.9%General aviation aircraftmovements250 290 1.5%Karonga Domestic passengers 2,200 2,880 2.7%G14 2 2 0.0%Domestic aircraft movements 370 460 2.2%General aviation aircraftmovements100 120 1.8%Overflights - 3,840 5,410 3.5%Source: Report on the Restructuring of the Civil Aviation Industry in Malawi.58

TABLE 3.20 STRENGTH AND WEAKNESSES OF THE TRANSPORT SECTOR SUMMARIZEDSub-Sector Strengths WeaknessesRoadWidest coverage of all sub-sectors Poor condition of unsurfaced roadsRailLakeAirProvides only access to many remoteareasProvides operational flexibility forusersRoad Haulage is in hands of privatesectorStrong Institutions (NRA)Connects major centers with NacalaportBest suited for bulk haulageManagement strengthened byconcessioningNatural north-south transportcorridorMinimal social costsManagement strengthened byconcessioningMajor mode for internationalbusiness and government travelCapacity is adequateHigh social costs and accident ratesShortage of means of transportFunding shortfalls for adequatemaintenanceHigh vehicle operating costsUncertainty regarding adequacy of policyStrategies are neither adequate norsufficiently comprehensive to ensureimplementation of policy in the focal areasCapacity and capability for enforcement notadequateLimited spatial coverageNo strong political lobbyUncertainty regarding adequacy of policyStrategies are neither adequate norsufficiently comprehensive to ensureimplementation of policy in the focal areasService of rail is infrequentAbsence of legal/regulatory framework forrailCapacity and capability for enforcement notadequateLimited spatial coverageInadequate infrastructureNecessity for trans-shipmentUncertainty regarding adequacy of policyStrategies are neither adequate norsufficiently comprehensive to ensureimplementation of policy in the focal areasCapacity and capability for enforcement notadequateInstitutional weaknesses yet to be addressedInadequate funding leading to lack ofmaintenanceUncertainty regarding adequacy of policyStrategies are neither adequate norsufficiently comprehensive to ensureimplementation of policy in the focal areasCapacity and capability for enforcement notadequate59

3.5 DONOR SUPPORT, ON-GOING AND PROPOSED PROJECTSRoad Maintenance and Rehabilitation project (ROMARP)This Program, which started in 1999, is funded by the World Bank (US$30 million) andNordic development (US$7 million) and aims at supporting on-going reform as well asthe improvement of the road network through backlog maintenance and rehabilitation.TABLE 3.21 BREAKDOWN OF ROMARP BUDGETComponentCost(US$ million)Strengthening of Road Sector Institutional Framework 6.1Development of construction and consulting industries through NCIC 4.9Support to sustainable periodic maintenance 10.1Support to selective rehabilitation and upgrading 16.9Project Preparation Facility (PPF) refinancing 1.5Total 39.5EU 6 th and 8 th EDFThese two road management support programs had an allocation of about US$15.7million in 1998. The programs provide technical assistance training, local services,equipment to NRA, road safety and axle load control and backlog maintenance. Theprogram has allocated US$96 million for a total of 7 projects with a total of 440 km.Another EU program under 9 th EDF is planned for 2002.ADB Funded road projects• ADB is currently funding three upgrading projects totaling 200km at a cost ofUS$51million. One project has started and two are yet to start.KfW• This program is funding backlog maintenance of 331 km of roads at a total cost ofUS$9million.60

TABLE 3.22 SUMMARY OF ONGOING DONOR FUNDED PROJECTSRehabilitation Length (km) Cost (US$ million)Main roads 867 156.3Urban roads 29 4.4Back-log maintenancePaved main roads 1,183 28.9Feeder roads (central and district) 1,262 2.0Total 3,341 191.6FundingA list of the sources of funding for projects by mode in Malawi is not currentlyavailable. There is no break down on where funds are derived from (i.e. internalgovernment, multilateral and bilateral sources, as well as the split between loans andgrants). Below is a list of major projects under the NRA.Donor agencies apparently do try to coordinate their efforts in order to facilitate anefficient flow of funds to the sector; but the emphasis, not unexpectedly, has been on theroad sub-sector. This is the mode with the greatest geographic coverage and whichcarries the majority of traffic, both goods and passenger. Road surfaces deteriorated inthe 1990s and required a considerable outlay for rehabilitation and upgrading.However, it is important that donors not lose sight of the needs of the other modes andof the requirements of an economically efficient transport system. This is one whichwould treat all modes alike in terms of operating conditions, i.e. full cost recovery withsubsidies not only for loss-making but also for socially desirable services. WhetherMalawi could pursue such a policy in isolation is an issue, though, given itscommitment to implementing regional transport policies (under SADC and COMESA),which themselves do not go far enough in terms of creating equitable competitionamong the modes. For example, strong views were expressed by ministry officials tothe effect that the road network was not designed and built for the current axle-loadand GVM standards, which have been adopted largely at the behest of regionalorganizations. Aggravating the situation is that enforcement of overloading control isweak, which skews the inter-modal distribution of traffic even more.61

TABLE 3.23 MAJOR DEVELOPMENT PROJECTS UNDER NRADonorAgencyEUNRAFuelLevyEU FoodSecurityADBKuwait/OPEC/BADEAWorldBankProjectExpected date ofcompletionWorks contractSupervisioncontractTotal contractsum(Kw)(Kw)(Kw)Karonga-Chilumba-Chiweta Road (M1-S102) 15/8/02 1,185,989,053.77 1,250,949,053.77Balaka-Lirangwe-MwanzaRoad (M1,M6) 12/01 203,930,230.91 203,930,230.91Blantyre-Chikwawa Road(M1) 2/10/01 159,916,739.50 159,916,739.50Lirangwe-Blantyre Road(M1) 20/6/01 66,318,796.60 66,318,796.60Chileka Roundabout-Blantyre (MagalasiSection)(M1) 12/8/01 59,228,287.21Balaka-Liramgwe-Mwanza 12/01 59,228,287.21 14,193,100.00Lirangwe-Blantyre 20/6/01 14,193,100.00 6,231,935.00Blantyre-Chikwawa 2/10/01 6,231,935.00 8,645,271.00Chikwina-Usisya Road(S108) 27,500,000.00 6,086,259.98 33,586,259.98Msulira-Nkhotakota Road(M18) 14/5/02 716,992,715.58 716,992,715.58Nselema-Naminga-Mangochi (S131) 19/11/01 2,800,000,000.00 2,800,000,000.00Lilongwe-Mchinji Road(M12) 12/01 123,194,455.70 123,194,455.70Lumbadzi River-Chitsime(M1), Lilongwe AirportRoad (M30), Chitsime toBunda Road (S125) 10/01 123,008,397.44 123,008,397.44Lilongwe-Salima-Senga BayRoad (M14-S122) 11/01 136,420,369.30 136,420,369.30Salima-Nkhotakota Road(M5) 02/02 126,210,528.00 126,210,528.00Limbe-Chiradzulu (S146),Zomba Air Wing Road(S143), Mangochi-MbalulaRoad (M3), Liwonde-Naminga Road (S131) 4/03/02 225,699,697.50 225,699,697.5062

DonorAgencyKfWProjectExpected date ofcompletionWorks contractSupervisioncontractTotal contractsum(Kw)(Kw)(Kw)Design of Selected MainRoads (Jenda-Chikangawa,Mzuzu-Nkhata Bay,Dwangwa-Nkhotakota,Blantyre-Zomba) (Sum in £) 12/01 679,123.00 679,123.00Design of Selected UrbanRoads in Lilongwe andBlantyre (Sum in $) 10/01 212,050.00 212,050.00Supervision of WorksContracts 25/98, 27/98 and30/98 (Sum in £) 615,785.00Supervision of WorksContracts 26/98, 28/98(Sum in CA$) 1,023,713.00Lilongwe InternationalAirport Junction-BuaBridge Road (M1) 85,950,084.00 85,950,084.00Bua Bridge-NkhamenyaRoad (M1) 80,978,709.24 80,978,709.24Notes: US$=70KwA coherent study on how to best fund the transport infrastructures in such a way as tobest fit the PRSP, the private sector development process, the international tradingagreements and the general process of globalization. This would assist inmainstreaming transport infrastructure development into the national economic agendain an economically efficient way.The road sector derives its funding from a number of sources. Road maintenance isfunded by the fuel levy, COMESA/SADC transit charges (which are distance-related atUS$10/100 km for the largest vehicle combinations) are intended to cover damage toroad surfaces, and capital projects are funded by donors.The NRA believes that, while it is receiving almost sufficient income for routinemaintenance, it would need an additional Kw2 billion per annum for rehabilitation.The priority for donor funding should be for roads into tourist and agricultural areas aswell as areas of heavy population. This is would cover approximately 2 700km of thenetwork.There are two points to bear in mind with regard to funding in the road sub-sector.First, a careful balance needs to be maintained in order to ensure that donor fundingdoes not place a burden on the NRA for maintenance once the construction programshave been concluded. Donors such as the EU for example, will not fund maintenance,63

which they believe ought to be self-financed out of the fuel levy. Although significantamounts of donor funding might be required in the short term, there could be longtermimplications for maintenance funding. If there is pressure on revenue formaintenance, there will be no alternative but to increase the fuel levy as a proportion ofthe pump price. There is already a view in government that the levy is too low: at thetime of fieldwork it stood at Kw4.75/l for diesel and Kw6.75/l for petrol.Secondly, the tendency of donors to use foreign (mainly South African) contractorsrather than local contractors pushes up project costs. Although there are some jointventures between South African and local contractors, the fact is that the foreigncontractors are more expensive than local ones.Rail, lake and air transport have been commercialized to varying degrees, but thereremains a need for donor assistance in infrastructure funding for the modes.TABLE 3.24 TRANSPORT SECTOR’S SHARE OF DONORS’ SUPPORTSource Year %Bilateral 1998 5.6Bilateral 1999 3.8Bilateral 2000 3.3Bilateral 1998-2000 4.0IDA 1999-2001 15.3ADB 1996-98 8.8The interventions listed in these sections are all gaps in present sector programs, anddonor funding in plugging these gaps would be essential in the improvement of thesector and in enhancing its ability to assist in meeting the government’s povertyalleviation goals.The existing transport sector policies are not engendered. This needs to be addressed.Malawi is the only country in Southern Africa that has a large lake as a national tourismasset. The review showed that the marketing of this lake together with the nationalparks could significantly increase tourism to Malawi, which will have a major spin forlocal communities and boost the poverty alleviation programs. Transport relatedtourism projects therefore need to be identified and supported.64

3.6 SUMMARY OF PUBLIC EXPENDITURE IN THE TRANSPORT SECTORThe budget for the financial year 2001/2002 amounted to Kw 45,875 million of whichKw3,041 million (or 6.6%) was allocated to two votes directly concerned with transport.These were Vote 400 (Ministry of Transport and Public Works) and Vote 420 (NationalRoads Authority). The details are set out in the table below.TABLE 3.25 TRANSPORT IN THE BUDGET, 2001/02Recurrent Capital TotalMTPW (Kw) 481,938,139 762,631,800 1,244,569,939NRA (Kw) - 1,796,000,000 1,796,000,000Transport (Kw) 481,938,139 2,558,631,800 3,040,569,939Total budget (Kw) 32,199,136,373 13,675,835,244 45,874,971,617Transport as % total 1.5 18.7 6.6Source: Approved Estimates of Expenditure on Recurrent Capital Accounts for the Financial Year2001/2002 (Output Based). Zomba: Government Printer.Two other ministries also usually receive funds for transport-related activities. Theseare:1. Ministry of District and Local Government Administration – this ministry hasactivities such as developing local capacity to construct and maintain feeder roads,access roads, trucks, paths and bridges, and ensuring all-year access to schools,clinics and other facilities. However, no capital funds were voted for this purpose in2001/02.2. Ministry of Tourism, Parks and Wildlife – although there was an allocation ofKw6,500,000 in 2000/01 for the development of road infrastructure in nationalparks, no capital budget figure appeared in the 2001/02 estimates.65

3.7 KEY ECONOMIC AND SOCIAL INDICATORSTABLE 3.26 FINANCIAL INDICATORSGDP (constant 1978 prices)(Kw million)Item 1996 1997 1998 1999 200011,443.8 12,240.8 12,509.2 13,012.9 13,316.2GDP real growth (%) 10.5 7.0 2.2 4.0 2.3GDP (current market prices)(Kw million)GDP per capita (current market prices)(Kw million)36,454.0 42,310.4 57,319.0 78,544.4 93,292.03,837.3 4,407.3 5,848.9 7,854.4 8,987.9Consumer price inflation (%) 37.6 9.2 29.8 44.9 29.6Prime lending rate (%) 26.0 22.0 43.0 47.0 50.0Manufacturing production index(1984=100)120.2 116.3 104.3 98.0 93.1Merchandise exports fob (US$ million) 483 539 539 447 n/aMerchandise imports fob (US$ million) 624 783 579 673 n/aCurrent account balance (US$ million) -176 -263 -43 -151 n/aGross official reserves (US$ million) 218 155 258 244 224Total external debt (US$ million) 2,156 2,259 2,479 2,589 2,706External debt-service ratio 16.8 15.3 18.2 17.7 20.6Exchange rate (av. Kw:US$) 15.3 16.5 31.1 44.2 59.1Source: Reserve Bank of Malawi, Financial and Economic Review, 33(1), 2001IMF, Malawi: Selected Issues and Statistical Appendix, 200166

TABLE 3.27 TRANSPORT COSTSCommodity Mode Route Rate (US $)Fertilizer Road Hre-Bl 55/tonRoad SA-Bl 85-110/tonRoad Beira-Bl 55/tonRoad Bl-Lil 7/ton (foreign haulier)Road Bl-Lil 22/ton (local haulier)Beverages Road Bl-Hre 55-64/tonRoad Bl-Jhb 71/tonRoad Bl-Beira 62/tonRoad Bl-Dar 118/tonGarments Rail Nac-Bl 1450/20 ft. containerRail Bl-Nac 810/20 ft. containerRoad Bl-Beira 900/20 ft. containerRoad Bl-Dbn 1,220/20 ft. containerRail Lil-Nac 830/20 ft. containerRoad Lil-Beira 920/20 ft. containerFoodstuffs Road Jhb-Bl 50/tonSugar Rail Bl-Nac 60/tonRoad Bl-Beira 100-110/ton ($60 if backloads)Tea Road Bl-Jhb 130/tonRoad Bl-Dbn 1,085/20 ft. containerRoad Bl-Dbn 2,065/40 ft. containerSea Dbn-Tilbury 775/20 ft. containerSea Dbn-Tilbury 1,550/40 ft. containerGeneral Road Jhb-Lil 70-77/tonRoad Jhb-Bl 65-72/tonRail Bl-Nac 2,050/20 ft. containerRoad Bl-Dbn 2,450/20 ft. containerRail Lil-Nac 1,000/ 40 ft. containerRoad Jhb-Bl 2,000/ 40 ft. containerRoad Beira-Bl 1,600/40 ft. containerRoad Jhb-Bl 100/tonRail Nac-Bl 50/tonRoad Lil-Beira 1,100/truckBl-Beira900/truckLil-Dbn2,400/truckBl-Dbn2,200/truckRail Lil-Nac 1,000/40 ft. containerBl-Nac850/40 ft. container67

TABLE 3.28 FUEL RATES (KW/L)From Mode Lilongwe BlantyreDar-es-Salaam Road 6.04 6.99Dar-es-Salaam Rail to Mbeya /road 5.51 6.54Dar-es-Salaam Rail to Mbeya /road/lake /road 6.26 6.41Beira Road 4.37 3.80Nacala Rail 5.07 3.94TABLE 3.29 DEMOGRAPHICSItem Unit Year ValuePopulation Million 1999 11Population growth rate % pa 1990-99 2.6Urban/total population % 1980 91998 24Population density Per km 2 1999 115Child malnutrition % children 15 yrs 1998 27– female %>15 yrs 1998 56Population below poverty line % 1990-91 54Education / GNP % 1980 3.41997 5.4Health / GNP % 1990-98 2.8Access to safe water % pop 1982-85 321990-96 45Access to sanitation % pop 1982-85 601990-96 53Infant mortality rate Per 1000 live births 1980 1691998 134Arable land Ha per capita 1979-81 0.201995-97 0.16Agric: value added 1995$/agric worker 1979-81 1021996-98 138Food production index (1989-91=100) 1979-81 91.11996-98 109.7Source: World Bank, World Development Report 2000/200168

TABLE 3.30 VOLUME OF CROPS MARKETED (TONS)Crop 1996 1997 1998 1999 2000Sugar 212,005 197,623 209,704 197,314 207,344Tobacco 141,662 153,900 134,300 134,386 158,993Tea 37,232 43,930 40,363 38,469 42,388Maize 62,928 13,800 53,515 198,048 8,639Source: Reserve Bank of Malawi, Financial and Economic Review, 33(1), 2001TABLE 3.31 VOLUMES OF CROPS EXPORTED (TONS)Crop 1996 1997 1998 1999 2000Sugar 44,800 58,600 40,100 86,100 46,700Tobacco 99,500 106,700 116,700 128,900 120,300Tea 32,600 36,700 39,800 40,500 47,000Coffee 5,400 5,100 4,200 3,600 4,400Cotton 2,200 10,600 20,600 4,300 5,000Pulses 28,600 41,800 26,000 14,000 19,600Source: IMF, Malawi: Selected Issues and Statistical Appendix, 2001TABLE 3.32 TOTAL POPULATION OF MALAWI, 1901–1998 CENSUSESYear Total Population Average Annual Inter-censalGrowth Rate (%)1901 737,153 -1911 970,430 2.81921 1,201,983 2.21926 1,263,291 1.51931 1,573,454 4.41945 2,049,914 2.21966 4,039,583 3.31977 5,547,460 2.91987 7,988,507 3.71998 9,933,868 2.0Source: 1998 Malawi Population and Housing Census: Report of Final Results69

TABLE 3.33 TOTAL GOODS AND PASSENGERSHANDLED BY RAIL, LAKE AND AIR TRANSPORT IN MALAWI (1995 – 2000)YearRAIL LAKE AIRNetPassengerNo. ofNetPassengerNo. ofFreight Handled (Tons)No of PassengersKm-Km(‘000)Kms(‘000)Passengers(‘000)Km-Km(‘000)Kms(‘000)Passengers(‘000) ChilekaAirportLilongweAirportChilekaAirport(‘000)LilongweAirport1995 73,707 21,524 422 4,368 15,577 209 1,302 5,401 105 1931996 56,923 26,166 465 1,426 9,644 141 1,168 5,971 117 2021997 45,551 17,274 390 2,848 10,125 132 1,068 5,167 125 2111998 54,985 20,749 425 4,601 8,601 110 477 2,433 74 1021999 62,442 19,106 327 3,996 8,128 95 824 4,548 119 1972000 79,747 24,789 418 745 7,054 80 678 4,670 104 202Source: Monthly Statistics Bulletin – March 2001TABLE 3.34 TOTAL MALAWI TRAFFICHANDLED THROUGH THE PORT OF DAR-ES-SALAAM IN TONS (1990 – 2000)1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000Imports 116,804 132,513 128,118 127,617 98,088 110,269 105,352 76,474 65,442 77,581 52,567Exports 23,856 35,627 6,379 7,782 7,750 2,205 0 2,491 144 0 60Others 0 0 0 0 0 0 6,722 63,645 16,481 25,561 15,303Total 140,660 166,040 134,497 135,379 105,838 112,474 112,074 132,610 82,067 103,142 67,930Source: Malawi Cargo Centers LimitedTABLE 3.35 MOVEMENT OF IMPORTS AND EXPORTS, 1998-2000 (‘000 TONS)Border1998 1999 2000Post Export Import Total Export Import Total Import Export TotalMchinji 34.3 80.9 115.2 27.5 58.1 85.6 30.9 69.5 100.4Mwanza 100.7 504.9 605.6 94.2 323.6 417.8 97.4 414.3 511.7Kaporo 20.0 144.2 164.2 11.4 93.6 105.0 15.7 118.9 134.6Nacala 27.8 115.7 143.5 27.9 111.7 139.6 94.7 133.2 222.9Total 182.7 845.7 1,028.5 161.1 587.0 748.0 238.7 735.9 969.670

TABLE 3.36 FUNDING OF ROAD DEVELOPMENT 2002 TO 2005 AS PER PRSPObjective Strategy Activity Indicators Indicatortype2002-3 (in order ofpriority)(in order ofpriority)CurrentSituation2001Targets2002/3 2003/4 2004/5CostingitemEstimatedcost (Kwmillion)EstimatedCost (Kwmillion)2002-3 2002-3 2003-4 2003-4 2003-4 2004-5 2004-5 2004-5Lead(funding)institutionOtherResponsibleInstitutionsCostingassumptionsRec Inv Total Rec Inv Total Rec Inv TotalImprove ruraltransportinfrastructureRehabilitate and Grading ofmaintain rural rural feederfeeder roads roadsKms roads graded 4,050 4,050 4,050 303.75 303.75 303.75 303.75 303.75 303.75 NRA 75000 150kms perdistrictRehabilitationof rural feederroadsKms roadsrehabilitated600 700 800 545.45 545.45 636.36 636.36 727.27 727.27 NRA 909090.9091Construction ofother roadinfrastructureMetres bridges etc.built8,000 8,000 8,000 208.00 208.00 208.00 208.00 208.00 208.00 NRA 26000 per mStrengthen coreroad networkRehabilitate andmaintain coreroad networkPeriodicmaintenance -Potholepatching andslurry sealingKms maintained 400 400 400 1,059.09 1,059.09 1,059.09 1,059.09 1,059.09 1,059.09 NRA 2647727.273Rehabilitationof core roadsKms rehabilitated 60 60 60 600.38 600.38 600.38 600.38 600.38 600.38 NRA 10006325.11Ensureadequate roadnetworks (seeinfrastructure)IncrementalexportsNRANational RoadsAuthority Total2,716.67 1,059.09 1,748.49 2,807.58 1,059.09 1,839.40 2,898.49Source: Implementation plan PRSP - NEC71

ANNEXESAir costsMalawi is considered to be one of the highest cost countries in the World to fly into.All private and cargo flights are considered by the aviation authorities to be commercialflights.Landing fees range from $6.00 to 25 for light aircraft.(the highest charges are USD 140.00 for Boeing 747’s)Parking fees $ 3.00 - $45.00 for a Boeing 747International Navigation Fees$ 30.00 In ward BoundInternational Navigation Fees$30.00 Outward BoundLocal Navigation Fees$ 12.00 In ward BoundLocal Navigation Fees$ 12.00 Outward BoundTemporary Service Permit$ 15.00 to operate as a charter (NB – Not charged if a privateplane)Overtime operating fees$ 150 per hour after 19h00and 14h00 in MzuzuAncillary charges (to pump up planes $30.00 per tyre (average light aircraft 3 tyres = $90.00)tyres)Use of power unit to charge batteries $135.00Passenger fee per passenger $20.00Fuel$0.75 per literOther regional CostsRSA - $0.51/lrZambia - $0.62Mozambique - $0.68Botswana - $0.51Average charges for one small aircraft to travel in and out of Malawi $370.00.Mozambique charges have now been lowered to an average of $85 for light aircraft.Other barriers to air flight• Minimum 48 hours notice for landing rights• Air cargo companies pay a royalty of 4 percent to Air Malawi• Costs 30 percent less to fly from Johannesburg to Lusaka than from Johannesburg toBlantyre (same flying time and distance)National transport policy action plans (Available by request)72

REFERENCESDocument Source DateFeasibility Study for the Re-structuring of Civil ICAO 2000Aviation in MalawiThe Central East African Railways Co. Ltd Brochure CEARC -Aircraft RegisterDepartment of Civil 2001AviationTraffic VolumesNRA Central 2000Planning DivisionMbeya Malawi Cargo Centre Users GuideMalawi Cargo -Centres LtdNational Transport Policy of Malawi MoTPW 2001Draft National Transport Policy Action Plans MoTPW 2001Malawi Road Management Support Programme Gopa for the 2001Volumes I and IIEuropeanCommissionTransport Statistics 1997National Statistics 1998OfficeDevelopment Projects Status Report NRA 2001Malawi Road Sector Investment Programme : 2000 – NRA 20002010Economic Report 2001National Economic 2001CouncilNational Tourism Policy – Five year planMinistry of Tourism, 2002Parks and WildlifeFinancial and Economic ReviewReserve Bank ofMalawi2001A Descriptive Document and Progress Report:Sartorial Report on TransportPRSP Technical Committee (2001) PRSP: Findings toDateMonthly Statistical BulletinNSO Annual Survey,Wilfred ALI ProjectManager NacalaMalawi GovernmentDevelopmentCorridor Secretariatunit Lilongwe/MALAWINational EconomicCouncilNational StatisticalOfficeNational StatisticalOfficeAugust20012000(variousyears)(variousyears)73

Road Maintenance and Rehabilitation Project(ROMARP) – Draft Final Report for EconomicFeasibility Study. Volume 1: Main ReportRoughtonInternational1998Malawi Road Condition Survey BKS 1999MTEF Phase Two: Consolidation and Revitalisation.Volume 1 – Overview of Plan of Action,Government ofMalawi Ministry ofFinance andEconomic Planning1999Vision 2020: National Long-term DevelopmentPerspective for Malawi,Office of thePresident andCabinetMalawi Government1999Malawi 2000 Public Expenditure Review, Ministry ofFinance and Economic PlanningVision 2020 Malawi Government 1997Economic Report,National Economic (variousCouncilyears)Malawi’s Check List for the needs assessment National Economic 2000CouncilTask Force report on Agricultural Diversification,2000Ministry of Agriculture and Irrigation, LilongweMalindi, E., C.Mataya, Z.Chikhosi,C. Jumbe, J. Luhanga,I. Kumwenda, and S.HiwaStudy to design, translate and update Malawi’s needs Imani Development 2002into a fully integrated framework for trade relatedtechnical assistance.Malawi Rural Travel and Transport Malawi Government 199974